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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 Acuity Brands Inc was -2.16. The lowest was -2.94. And the median was -2.58.
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 Acuity Brands Inc 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 * 1.106||+||0.528 * 0.9669||+||0.404 * 1.4294||+||0.892 * 1.1662||+||0.115 * 1.2572|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0033||+||4.679 * -0.0282||-||0.327 * 0.9317|
|This Year (Feb16) TTM:||Last Year (Feb15) TTM:|
|Accounts Receivable was $459 Mil.|
Revenue was 777.8 + 736.6 + 759.5 + 683.7 = $2,958 Mil.
Gross Profit was 336.9 + 319.4 + 321.3 + 295.6 = $1,273 Mil.
Total Current Assets was $998 Mil.
Total Assets was $2,620 Mil.
Property, Plant and Equipment(Net PPE) was $257 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $840 Mil.
Total Current Liabilities was $513 Mil.
Long-Term Debt was $354 Mil.
Net Income was 65.5 + 68.4 + 60.1 + 64.5 = $259 Mil.
Non Operating Income was 1.1 + 0.7 + -11.7 + 9.5 = $-0 Mil.
Cash Flow from Operations was 68.4 + 51.1 + 130.7 + 82.7 = $333 Mil.
|Accounts Receivable was $356 Mil.
Revenue was 616.1 + 647.4 + 668.7 + 603.9 = $2,536 Mil.
Gross Profit was 255.7 + 273 + 283.5 + 243.4 = $1,056 Mil.
Total Current Assets was $1,250 Mil.
Total Assets was $2,218 Mil.
Property, Plant and Equipment(Net PPE) was $159 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $718 Mil.
Total Current Liabilities was $434 Mil.
Long-Term Debt was $354 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)|
|=||(458.8 / 2957.6)||/||(355.7 / 2536.1)|
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)|
|=||(319.4 / 2536.1)||/||(336.9 / 2957.6)|
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 - (997.7 + 256.6) / 2619.8)||/||(1 - (1250.2 + 159.1) / 2218.1)|
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))|
|=||(44.5 / (44.5 + 159.1))||/||(54 / (54 + 256.6))|
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)|
|=||(839.6 / 2957.6)||/||(717.6 / 2536.1)|
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)|
|=||((353.5 + 513.4) / 2619.8)||/||((353.7 + 434.1) / 2218.1)|
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|
|=||(258.5 - -0.4||-||332.9)||/||2619.8|
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.
Acuity Brands Inc has a M-score of -2.16 signals that the company is likely to 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
Acuity Brands Inc Annual Data
Acuity Brands Inc Quarterly Data