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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Assa Abloy AB was -2.27. The lowest was -3.15. And the median was -2.45.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Assa Abloy AB for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9709||+||0.528 * 0.9839||+||0.404 * 0.996||+||0.892 * 1.0954||+||0.115 * 0.949|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9767||+||4.679 * 0||-||0.327 * 0.9467|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,389 Mil.|
Revenue was 2077.23262856 + 2065.43995961 + 2088.57446268 + 1919.35735455 = $8,151 Mil.
Gross Profit was 796.314016437 + 797.873832431 + 802.883680582 + 747.30931212 = $3,144 Mil.
Total Current Assets was $2,849 Mil.
Total Assets was $10,486 Mil.
Property, Plant and Equipment(Net PPE) was $1,011 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $1,650 Mil.
Total Current Liabilities was $2,541 Mil.
Long-Term Debt was $2,014 Mil.
Net Income was 247.479977454 + 245.294662141 + 229.438071165 + 197.161129309 = $919 Mil.
Non Operating Income was 0 + 0.140248520378 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 415.525174009 + 293.399904631 + 252.322050883 + -42.1151146467 = $919 Mil.
|Accounts Receivable was $1,306 Mil.
Revenue was 2026.94015001 + 1869.18335901 + 1858.61807137 + 1686.00682594 = $7,441 Mil.
Gross Profit was 675.952854737 + 745.608628659 + 726.803340926 + 676.078188024 = $2,824 Mil.
Total Current Assets was $2,702 Mil.
Total Assets was $10,066 Mil.
Property, Plant and Equipment(Net PPE) was $978 Mil.
Depreciation, Depletion and Amortization(DDA) was $152 Mil.
Selling, General & Admin. Expense(SGA) was $1,543 Mil.
Total Current Liabilities was $2,578 Mil.
Long-Term Debt was $2,040 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1388.79786077 / 8150.60440539)||/||(1305.8319302 / 7440.74840633)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(797.873832431 / 7440.74840633)||/||(796.314016437 / 8150.60440539)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2849.42783363 + 1010.89278926) / 10486.1775616)||/||(1 - (2702.28072861 + 978.111128119) / 10066.2788918)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(152.457123872 / (152.457123872 + 978.111128119))||/||(167.446432319 / (167.446432319 + 1010.89278926))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1650.29194901 / 8150.60440539)||/||(1542.53447252 / 7440.74840633)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2013.65858774 + 2540.7332643) / 10486.1775616)||/||((2040.25715598 + 2577.98867289) / 10066.2788918)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(919.373840069 - 0.140248520378||-||919.132014877)||/||10486.1775616|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Assa Abloy AB has a M-score of -2.42 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Assa Abloy AB Annual Data
Assa Abloy AB Quarterly Data