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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 -2.10. 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 * 1.0318||+||0.528 * 0.9835||+||0.404 * 1.0643||+||0.892 * 1.2182||+||0.115 * 1.0519|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0128||+||4.679 * -0.0128||-||0.327 * 0.9439|
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $523 Mil.|
Revenue was 851.2 + 925.4 + 851.5 + 777.8 = $3,406 Mil.
Gross Profit was 359.6 + 402 + 377.9 + 336.9 = $1,476 Mil.
Total Current Assets was $1,356 Mil.
Total Assets was $2,963 Mil.
Property, Plant and Equipment(Net PPE) was $274 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $971 Mil.
Total Current Liabilities was $610 Mil.
Long-Term Debt was $356 Mil.
Net Income was 81.7 + 82.9 + 74 + 65.5 = $304 Mil.
Non Operating Income was 7.9 + 0.1 + -0.3 + 1.1 = $9 Mil.
Cash Flow from Operations was 38.7 + 101.8 + 124.4 + 68.4 = $333 Mil.
|Accounts Receivable was $416 Mil.
Revenue was 736.6 + 759.5 + 683.7 + 616.1 = $2,796 Mil.
Gross Profit was 319.4 + 321.3 + 295.6 + 255.7 = $1,192 Mil.
Total Current Assets was $1,255 Mil.
Total Assets was $2,506 Mil.
Property, Plant and Equipment(Net PPE) was $191 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $787 Mil.
Total Current Liabilities was $513 Mil.
Long-Term Debt was $352 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)|
|=||(522.5 / 3405.9)||/||(415.7 / 2795.9)|
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)|
|=||(1192 / 2795.9)||/||(1476.4 / 3405.9)|
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 - (1356.2 + 273.5) / 2963.4)||/||(1 - (1255.2 + 191.3) / 2506.3)|
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))|
|=||(48.8 / (48.8 + 191.3))||/||(65.5 / (65.5 + 273.5))|
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)|
|=||(971.2 / 3405.9)||/||(787.2 / 2795.9)|
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)|
|=||((355.7 + 609.8) / 2963.4)||/||((352.4 + 512.7) / 2506.3)|
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|
|=||(304.1 - 8.8||-||333.3)||/||2963.4|
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 -2.28 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