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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 Best Buy Co Inc was -0.66. The lowest was -4.05. And the median was -2.64.
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 Best Buy Co 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 * 0.9852||+||0.528 * 1.0319||+||0.404 * 1.2168||+||0.892 * 0.9933||+||0.115 * 0.9719|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9429||+||4.679 * -0.0478||-||0.327 * 0.9499|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $1,280 Mil.|
Revenue was 13028 + 9380 + 8896 + 9035 = $40,339 Mil.
Gross Profit was 2844 + 2128 + 2055 + 2020 = $9,047 Mil.
Total Current Assets was $11,729 Mil.
Total Assets was $15,256 Mil.
Property, Plant and Equipment(Net PPE) was $2,295 Mil.
Depreciation, Depletion and Amortization(DDA) was $656 Mil.
Selling, General & Admin. Expense(SGA) was $7,592 Mil.
Total Current Liabilities was $7,777 Mil.
Long-Term Debt was $1,580 Mil.
Net Income was 519 + 107 + 146 + 461 = $1,233 Mil.
Non Operating Income was 3 + 8 + 10 + 6 = $27 Mil.
Cash Flow from Operations was 1161 + 287 + 179 + 308 = $1,935 Mil.
|Accounts Receivable was $1,308 Mil.
Revenue was 12671 + 9327 + 9266 + 9347 = $40,611 Mil.
Gross Profit was 2626 + 2157 + 2458 + 2158 = $9,399 Mil.
Total Current Assets was $10,485 Mil.
Total Assets was $14,013 Mil.
Property, Plant and Equipment(Net PPE) was $2,598 Mil.
Depreciation, Depletion and Amortization(DDA) was $716 Mil.
Selling, General & Admin. Expense(SGA) was $8,106 Mil.
Total Current Liabilities was $7,436 Mil.
Long-Term Debt was $1,612 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)|
|=||(1280 / 40339)||/||(1308 / 40611)|
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)|
|=||(2128 / 40611)||/||(2844 / 40339)|
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 - (11729 + 2295) / 15256)||/||(1 - (10485 + 2598) / 14013)|
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))|
|=||(716 / (716 + 2598))||/||(656 / (656 + 2295))|
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)|
|=||(7592 / 40339)||/||(8106 / 40611)|
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)|
|=||((1580 + 7777) / 15256)||/||((1612 + 7436) / 14013)|
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|
|=||(1233 - 27||-||1935)||/||15256|
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.
Best Buy Co Inc has a M-score of -2.60 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
Best Buy Co Inc Annual Data
Best Buy Co Inc Quarterly Data