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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 0.98. The lowest was -3.33. And the median was -2.54.
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 * 1.0501||+||0.528 * 0.9925||+||0.404 * 0.9351||+||0.892 * 1.0392||+||0.115 * 0.9658|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0059||+||4.679 * -0.043||-||0.327 * 0.9713|
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $271 Mil.|
Revenue was 2467.845 + 3398.769 + 2593.672 + 2257.192 = $10,717 Mil.
Gross Profit was 1301.542 + 1794.748 + 1370.458 + 1190.596 = $5,657 Mil.
Total Current Assets was $4,369 Mil.
Total Assets was $8,743 Mil.
Property, Plant and Equipment(Net PPE) was $3,751 Mil.
Depreciation, Depletion and Amortization(DDA) was $303 Mil.
Selling, General & Admin. Expense(SGA) was $3,576 Mil.
Total Current Liabilities was $4,850 Mil.
Long-Term Debt was $4,997 Mil.
Net Income was 278.125 + 426.768 + 327.515 + 228.613 = $1,261 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 406.5 + 530.429 + 516.347 + 183.55 = $1,637 Mil.
|Accounts Receivable was $248 Mil.
Revenue was 2386.043 + 3290.404 + 2493.021 + 2143.651 = $10,313 Mil.
Gross Profit was 1252.934 + 1727.548 + 1302.789 + 1120.033 = $5,403 Mil.
Total Current Assets was $4,054 Mil.
Total Assets was $8,218 Mil.
Property, Plant and Equipment(Net PPE) was $3,537 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $3,421 Mil.
Total Current Liabilities was $4,775 Mil.
Long-Term Debt was $4,754 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)|
|=||(270.768 / 10717.478)||/||(248.12 / 10313.119)|
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)|
|=||(5403.304 / 10313.119)||/||(5657.344 / 10717.478)|
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 - (4368.686 + 3750.511) / 8742.544)||/||(1 - (4053.871 + 3537.055) / 8217.528)|
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))|
|=||(275.157 / (275.157 + 3537.055))||/||(302.926 / (302.926 + 3750.511))|
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)|
|=||(3576.042 / 10717.478)||/||(3420.819 / 10313.119)|
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)|
|=||((4997.446 + 4850.219) / 8742.544)||/||((4754.101 + 4775.241) / 8217.528)|
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|
|=||(1261.021 - 0||-||1636.826)||/||8742.544|
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 -2.63 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