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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 0.08. The lowest was -4.02. And the median was -2.68.
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 * 0.9242||+||0.528 * 0.9732||+||0.404 * 0.9629||+||0.892 * 0.9775||+||0.115 * 1.0267|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0086||+||4.679 * -0.0973||-||0.327 * 1.0335|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $926 Mil.|
Revenue was 8533 + 8443 + 13623 + 8819 = $39,418 Mil.
Gross Profit was 2062 + 2145 + 2951 + 2112 = $9,270 Mil.
Total Current Assets was $9,694 Mil.
Total Assets was $13,254 Mil.
Property, Plant and Equipment(Net PPE) was $2,295 Mil.
Depreciation, Depletion and Amortization(DDA) was $658 Mil.
Selling, General & Admin. Expense(SGA) was $7,558 Mil.
Total Current Liabilities was $6,800 Mil.
Long-Term Debt was $1,341 Mil.
Net Income was 198 + 229 + 479 + 125 = $1,031 Mil.
Non Operating Income was 8 + 8 + -1 + 3 = $18 Mil.
Cash Flow from Operations was 805 + 483 + 859 + 155 = $2,302 Mil.
|Accounts Receivable was $1,025 Mil.
Revenue was 8528 + 8558 + 14209 + 9032 = $40,327 Mil.
Gross Profit was 2098 + 2030 + 3026 + 2076 = $9,230 Mil.
Total Current Assets was $9,980 Mil.
Total Assets was $13,559 Mil.
Property, Plant and Equipment(Net PPE) was $2,235 Mil.
Depreciation, Depletion and Amortization(DDA) was $663 Mil.
Selling, General & Admin. Expense(SGA) was $7,666 Mil.
Total Current Liabilities was $6,838 Mil.
Long-Term Debt was $1,220 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)|
|=||(926 / 39418)||/||(1025 / 40327)|
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)|
|=||(9230 / 40327)||/||(9270 / 39418)|
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 - (9694 + 2295) / 13254)||/||(1 - (9980 + 2235) / 13559)|
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))|
|=||(663 / (663 + 2235))||/||(658 / (658 + 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)|
|=||(7558 / 39418)||/||(7666 / 40327)|
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)|
|=||((1341 + 6800) / 13254)||/||((1220 + 6838) / 13559)|
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|
|=||(1031 - 18||-||2302)||/||13254|
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 -3.06 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