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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 1.03. The lowest was -3.21. And the median was -2.48.
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 * 1.0835||+||0.528 * 0.9944||+||0.404 * 1.089||+||0.892 * 1.0424||+||0.115 * 0.9797|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0136||+||4.679 * -0.0246||-||0.327 * 0.9764|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $196 Mil.|
Revenue was 2260.264 + 3049.696 + 2341.545 + 1990.494 = $9,642 Mil.
Gross Profit was 1176.661 + 1595.217 + 1216.958 + 1037.035 = $5,026 Mil.
Total Current Assets was $3,708 Mil.
Total Assets was $7,717 Mil.
Property, Plant and Equipment(Net PPE) was $3,358 Mil.
Depreciation, Depletion and Amortization(DDA) was $257 Mil.
Selling, General & Admin. Expense(SGA) was $3,171 Mil.
Total Current Liabilities was $5,091 Mil.
Long-Term Debt was $3,863 Mil.
Net Income was 238.31 + 373.67 + 285.157 + 192.83 = $1,090 Mil.
Non Operating Income was 0 + 0 + 0 + -78.98 = $-79 Mil.
Cash Flow from Operations was 375.228 + 370.116 + 463.146 + 150.629 = $1,359 Mil.
|Accounts Receivable was $173 Mil.
Revenue was 2093.578 + 3095.414 + 2205.878 + 1855.198 = $9,250 Mil.
Gross Profit was 1085.697 + 1604.375 + 1142.713 + 961.981 = $4,795 Mil.
Total Current Assets was $3,370 Mil.
Total Assets was $7,023 Mil.
Property, Plant and Equipment(Net PPE) was $3,109 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $3,001 Mil.
Total Current Liabilities was $4,333 Mil.
Long-Term Debt was $4,013 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)|
|=||(195.521 / 9641.999)||/||(173.114 / 9250.068)|
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)|
|=||(1595.217 / 9250.068)||/||(1176.661 / 9641.999)|
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 - (3707.581 + 3358.064) / 7717.101)||/||(1 - (3370.235 + 3108.77) / 7023.423)|
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))|
|=||(232.323 / (232.323 + 3108.77))||/||(256.54 / (256.54 + 3358.064))|
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)|
|=||(3170.812 / 9641.999)||/||(3001.219 / 9250.068)|
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)|
|=||((3862.865 + 5090.964) / 7717.101)||/||((4013.244 + 4332.825) / 7023.423)|
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|
|=||(1089.967 - -78.98||-||1359.119)||/||7717.101|
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 -2.44 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