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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 -4.05. And the median was -2.67.
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 * 1.1435||+||0.528 * 1.0156||+||0.404 * 0.8629||+||0.892 * 0.999||+||0.115 * 0.9216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9579||+||4.679 * -0.0544||-||0.327 * 0.9496|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $995 Mil.|
Revenue was 8558 + 13028 + 9380 + 8896 = $39,862 Mil.
Gross Profit was 2030 + 2844 + 2128 + 2055 = $9,057 Mil.
Total Current Assets was $10,396 Mil.
Total Assets was $13,719 Mil.
Property, Plant and Equipment(Net PPE) was $2,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $658 Mil.
Selling, General & Admin. Expense(SGA) was $7,538 Mil.
Total Current Liabilities was $6,721 Mil.
Long-Term Debt was $1,224 Mil.
Net Income was 129 + 519 + 107 + 146 = $901 Mil.
Non Operating Income was 9 + 3 + 8 + 10 = $30 Mil.
Cash Flow from Operations was -10 + 1161 + 287 + 179 = $1,617 Mil.
|Accounts Receivable was $871 Mil.
Revenue was 8639 + 12671 + 9327 + 9266 = $39,903 Mil.
Gross Profit was 1967 + 2626 + 2157 + 2458 = $9,208 Mil.
Total Current Assets was $10,118 Mil.
Total Assets was $13,911 Mil.
Property, Plant and Equipment(Net PPE) was $2,525 Mil.
Depreciation, Depletion and Amortization(DDA) was $667 Mil.
Selling, General & Admin. Expense(SGA) was $7,877 Mil.
Total Current Liabilities was $6,880 Mil.
Long-Term Debt was $1,604 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)|
|=||(995 / 39862)||/||(871 / 39903)|
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)|
|=||(2844 / 39903)||/||(2030 / 39862)|
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 - (10396 + 2244) / 13719)||/||(1 - (10118 + 2525) / 13911)|
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))|
|=||(667 / (667 + 2525))||/||(658 / (658 + 2244))|
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)|
|=||(7538 / 39862)||/||(7877 / 39903)|
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)|
|=||((1224 + 6721) / 13719)||/||((1604 + 6880) / 13911)|
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|
|=||(901 - 30||-||1617)||/||13719|
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 -2.64 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