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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 -2.25. The lowest was -2.94. And the median was -2.61.
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 * 0.9894||+||0.528 * 0.9853||+||0.404 * 0.8701||+||0.892 * 1.1299||+||0.115 * 1.02|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9842||+||4.679 * -0.0246||-||0.327 * 0.9599|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $372 Mil.|
Revenue was 647.4 + 668.7 + 603.9 + 546.2 = $2,466 Mil.
Gross Profit was 273 + 283.5 + 243.4 + 215.2 = $1,015 Mil.
Total Current Assets was $1,226 Mil.
Total Assets was $2,206 Mil.
Property, Plant and Equipment(Net PPE) was $161 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $697 Mil.
Total Current Liabilities was $454 Mil.
Long-Term Debt was $354 Mil.
Net Income was 51.1 + 54.8 + 43.8 + 32.7 = $182 Mil.
Non Operating Income was 0.9 + -0.7 + 0.1 + -0.1 = $0 Mil.
Cash Flow from Operations was 46.7 + 104.3 + 71.4 + 14 = $236 Mil.
|Accounts Receivable was $333 Mil.
Revenue was 574.7 + 579.8 + 541.5 + 486.7 = $2,183 Mil.
Gross Profit was 237.1 + 237.3 + 221.1 + 189.7 = $885 Mil.
Total Current Assets was $979 Mil.
Total Assets was $1,966 Mil.
Property, Plant and Equipment(Net PPE) was $147 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $627 Mil.
Total Current Liabilities was $396 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)|
|=||(371.8 / 2466.2)||/||(332.6 / 2182.7)|
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)|
|=||(283.5 / 2182.7)||/||(273 / 2466.2)|
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 - (1225.5 + 160.7) / 2206.1)||/||(1 - (979.3 + 147.1) / 1966.2)|
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))|
|=||(41.4 / (41.4 + 147.1))||/||(44.1 / (44.1 + 160.7))|
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)|
|=||(696.9 / 2466.2)||/||(626.7 / 2182.7)|
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)|
|=||((353.6 + 453.6) / 2206.1)||/||((353.6 + 395.9) / 1966.2)|
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|
|=||(182.4 - 0.2||-||236.4)||/||2206.1|
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 -2.53 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
Acuity Brands Inc Annual Data
Acuity Brands Inc Quarterly Data