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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 AutoZone Inc was 0.23. The lowest was -3.08. And the median was -2.59.
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 AutoZone 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 * 1.1117||+||0.528 * 0.9916||+||0.404 * 0.943||+||0.892 * 1.044||+||0.115 * 0.9689|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0073||+||4.679 * -0.031||-||0.327 * 0.9701|
|This Year (Aug16) TTM:||Last Year (Aug15) TTM:|
|Accounts Receivable was $288 Mil.|
Revenue was 3398.769 + 2593.672 + 2257.192 + 2386.043 = $10,636 Mil.
Gross Profit was 1794.748 + 1370.458 + 1190.596 + 1252.934 = $5,609 Mil.
Total Current Assets was $4,240 Mil.
Total Assets was $8,600 Mil.
Property, Plant and Equipment(Net PPE) was $3,733 Mil.
Depreciation, Depletion and Amortization(DDA) was $297 Mil.
Selling, General & Admin. Expense(SGA) was $3,548 Mil.
Total Current Liabilities was $4,690 Mil.
Long-Term Debt was $4,924 Mil.
Net Income was 426.768 + 327.515 + 228.613 + 258.112 = $1,241 Mil.
Non Operating Income was 0 + 0 + 0 + -70.02 = $-70 Mil.
Cash Flow from Operations was 530.429 + 516.347 + 207.051 + 323.502 = $1,577 Mil.
|Accounts Receivable was $248 Mil.
Revenue was 3290.404 + 2493.021 + 2143.651 + 2260.264 = $10,187 Mil.
Gross Profit was 1727.548 + 1302.789 + 1120.033 + 1176.661 = $5,327 Mil.
Total Current Assets was $3,970 Mil.
Total Assets was $8,102 Mil.
Property, Plant and Equipment(Net PPE) was $3,506 Mil.
Depreciation, Depletion and Amortization(DDA) was $270 Mil.
Selling, General & Admin. Expense(SGA) was $3,374 Mil.
Total Current Liabilities was $4,713 Mil.
Long-Term Debt was $4,625 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)|
|=||(287.68 / 10635.676)||/||(247.872 / 10187.34)|
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)|
|=||(5327.031 / 10187.34)||/||(5608.736 / 10635.676)|
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 - (4239.573 + 3733.254) / 8599.787)||/||(1 - (3970.294 + 3505.632) / 8102.349)|
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))|
|=||(269.919 / (269.919 + 3505.632))||/||(297.397 / (297.397 + 3733.254))|
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)|
|=||(3548.341 / 10635.676)||/||(3373.979 / 10187.34)|
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)|
|=||((4924.119 + 4690.32) / 8599.787)||/||((4624.876 + 4712.873) / 8102.349)|
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|
|=||(1241.008 - -70.02||-||1577.329)||/||8599.787|
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.
AutoZone Inc has a M-score of -2.51 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
AutoZone Inc Annual Data
AutoZone Inc Quarterly Data