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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 -2.21. 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 * 0.9869||+||0.528 * 0.9867||+||0.404 * 0.997||+||0.892 * 1.0388||+||0.115 * 0.9554|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0116||+||4.679 * -0.0024||-||0.327 * 0.9784|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,496 Mil.|
Revenue was 2112.85766197 + 2154.78727888 + 1905.53277214 + 2154.51270338 = $8,328 Mil.
Gross Profit was 836.820574135 + 846.669797575 + 754.850468859 + 829.54625727 = $3,268 Mil.
Total Current Assets was $3,133 Mil.
Total Assets was $10,905 Mil.
Property, Plant and Equipment(Net PPE) was $932 Mil.
Depreciation, Depletion and Amortization(DDA) was $184 Mil.
Selling, General & Admin. Expense(SGA) was $1,703 Mil.
Total Current Liabilities was $2,741 Mil.
Long-Term Debt was $1,900 Mil.
Net Income was 248.73697413 + 243.96999145 + 196.417008418 + 249.593821376 = $939 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 302.071245209 + 287.080187373 + -66.4316377677 + 442.675834138 = $965 Mil.
|Accounts Receivable was $1,459 Mil.
Revenue was 2087.64149703 + 2066.71264201 + 1784.94522985 + 2077.23262856 = $8,017 Mil.
Gross Profit was 807.803105464 + 801.301828125 + 698.553506226 + 796.314016437 = $3,104 Mil.
Total Current Assets was $2,982 Mil.
Total Assets was $10,459 Mil.
Property, Plant and Equipment(Net PPE) was $899 Mil.
Depreciation, Depletion and Amortization(DDA) was $168 Mil.
Selling, General & Admin. Expense(SGA) was $1,620 Mil.
Total Current Liabilities was $2,463 Mil.
Long-Term Debt was $2,086 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)|
|=||(1495.58673559 / 8327.69041637)||/||(1458.77909131 / 8016.53199744)|
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)|
|=||(3103.97245625 / 8016.53199744)||/||(3267.88709784 / 8327.69041637)|
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 - (3133.47633951 + 932.470607542) / 10905.0415538)||/||(1 - (2981.74733143 + 898.528550425) / 10459.3648024)|
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))|
|=||(167.522130908 / (167.522130908 + 898.528550425))||/||(183.569195784 / (183.569195784 + 932.470607542))|
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)|
|=||(1702.90583919 / 8327.69041637)||/||(1620.43992952 / 8016.53199744)|
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)|
|=||((1899.52057765 + 2740.91266074) / 10905.0415538)||/||((2086.20710264 + 2462.73562916) / 10459.3648024)|
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|
|=||(938.717795374 - 0||-||965.395628952)||/||10905.0415538|
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 -2.48 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