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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.
AutoZone Inc has a M-score of -2.54 suggests that the company is not a 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 -2.51.
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 * 1.1071||+||0.528 * 0.9979||+||0.404 * 0.9094||+||0.892 * 1.0761||+||0.115 * 0.9786|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9974||+||4.679 * -0.0393||-||0.327 * 1.0141|
|This Year (Feb14) TTM:||Last Year (Feb13) TTM:|
|Accounts Receivable was $191 Mil.|
Revenue was 1990.494 + 2093.578 + 3095.414 + 2205.878 = $9,385 Mil.
Gross Profit was 1037.035 + 1085.697 + 1604.375 + 1142.713 = $4,870 Mil.
Total Current Assets was $3,538 Mil.
Total Assets was $7,263 Mil.
Property, Plant and Equipment(Net PPE) was $3,135 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $3,057 Mil.
Total Current Liabilities was $4,399 Mil.
Long-Term Debt was $4,163 Mil.
Net Income was 192.83 + 218.087 + 371.199 + 265.583 = $1,048 Mil.
Non Operating Income was -78.98 + 0 + 0 + 0 = $-79 Mil.
Cash Flow from Operations was 150.629 + 357.343 + 519.147 + 385.021 = $1,412 Mil.
|Accounts Receivable was $160 Mil.
Revenue was 1855.198 + 1991.04 + 2763.586 + 2111.866 = $8,722 Mil.
Gross Profit was 961.981 + 1031.866 + 1432.395 + 1089.799 = $4,516 Mil.
Total Current Assets was $3,123 Mil.
Total Assets was $6,662 Mil.
Property, Plant and Equipment(Net PPE) was $2,945 Mil.
Depreciation, Depletion and Amortization(DDA) was $219 Mil.
Selling, General & Admin. Expense(SGA) was $2,848 Mil.
Total Current Liabilities was $4,232 Mil.
Long-Term Debt was $3,513 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)|
|=||(191.115 / 9385.364)||/||(160.42 / 8721.69)|
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)|
|=||(1085.697 / 8721.69)||/||(1037.035 / 9385.364)|
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 - (3538.498 + 3135.255) / 7262.892)||/||(1 - (3123.368 + 2944.549) / 6662.188)|
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))|
|=||(218.705 / (218.705 + 2944.549))||/||(238.361 / (238.361 + 3135.255))|
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)|
|=||(3056.5 / 9385.364)||/||(2847.888 / 8721.69)|
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)|
|=||((4163.244 + 4399.31) / 7262.892)||/||((3513.273 + 4231.808) / 6662.188)|
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|
|=||(1047.699 - -78.98||-||1412.14)||/||7262.892|
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 -2.54 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