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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 * 1.0636||+||0.528 * 0.9943||+||0.404 * 1.0186||+||0.892 * 1.0447||+||0.115 * 0.9971|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0105||+||4.679 * -0.0208||-||0.327 * 0.9658|
|This Year (May15) TTM:||Last Year (May14) TTM:|
|Accounts Receivable was $212 Mil.|
Revenue was 2493.021 + 2143.651 + 2260.264 + 3049.696 = $9,947 Mil.
Gross Profit was 1302.789 + 1120.033 + 1176.661 + 1595.217 = $5,195 Mil.
Total Current Assets was $3,950 Mil.
Total Assets was $8,032 Mil.
Property, Plant and Equipment(Net PPE) was $3,426 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $3,281 Mil.
Total Current Liabilities was $4,693 Mil.
Long-Term Debt was $4,533 Mil.
Net Income was 309.071 + 211.723 + 238.31 + 373.67 = $1,133 Mil.
Non Operating Income was 0 + -69.072 + 0 + 0 = $-69 Mil.
Cash Flow from Operations was 522.574 + 101.31 + 375.228 + 370.116 = $1,369 Mil.
|Accounts Receivable was $191 Mil.
Revenue was 2341.545 + 1990.494 + 2093.578 + 3095.414 = $9,521 Mil.
Gross Profit was 1216.958 + 1037.035 + 1085.697 + 1604.375 = $4,944 Mil.
Total Current Assets was $3,588 Mil.
Total Assets was $7,372 Mil.
Property, Plant and Equipment(Net PPE) was $3,193 Mil.
Depreciation, Depletion and Amortization(DDA) was $244 Mil.
Selling, General & Admin. Expense(SGA) was $3,108 Mil.
Total Current Liabilities was $4,604 Mil.
Long-Term Debt was $4,163 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)|
|=||(212.068 / 9946.632)||/||(190.848 / 9521.031)|
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)|
|=||(1120.033 / 9521.031)||/||(1302.789 / 9946.632)|
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 - (3950.49 + 3426.388) / 8032.44)||/||(1 - (3587.844 + 3193.289) / 7371.802)|
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))|
|=||(243.605 / (243.605 + 3193.289))||/||(262.192 / (262.192 + 3426.388))|
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)|
|=||(3280.719 / 9946.632)||/||(3107.823 / 9521.031)|
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)|
|=||((4533.329 + 4693.102) / 8032.44)||/||((4163.244 + 4603.952) / 7371.802)|
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|
|=||(1132.774 - -69.072||-||1369.228)||/||8032.44|
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 -2.47 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