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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.
Beam Inc has a M-score of -2.48 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Beam Inc was -1.65. The lowest was -3.38. And the median was -2.55.
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 Beam 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 * 0.9106||+||0.528 * 1.0055||+||0.404 * 0.989||+||0.892 * 1.0352||+||0.115 * 0.9522|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9283||+||4.679 * -0.0012||-||0.327 * 0.8426|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $427 Mil.|
Revenue was 739.5 + 598.7 + 637.6 + 577.7 = $2,554 Mil.
Gross Profit was 414.6 + 343.4 + 374.1 + 349.1 = $1,481 Mil.
Total Current Assets was $2,890 Mil.
Total Assets was $8,585 Mil.
Property, Plant and Equipment(Net PPE) was $816 Mil.
Depreciation, Depletion and Amortization(DDA) was $121 Mil.
Selling, General & Admin. Expense(SGA) was $793 Mil.
Total Current Liabilities was $707 Mil.
Long-Term Debt was $2,025 Mil.
Net Income was 90.3 + 84.8 + 74.3 + 114.5 = $364 Mil.
Non Operating Income was 4.8 + -13.5 + -42.3 + 1.4 = $-50 Mil.
Cash Flow from Operations was 309.7 + 142.5 + 31.1 + -59.5 = $424 Mil.
|Accounts Receivable was $453 Mil.
Revenue was 709.2 + 626.7 + 597 + 533.8 = $2,467 Mil.
Gross Profit was 405.4 + 371 + 347.6 + 314.7 = $1,439 Mil.
Total Current Assets was $2,903 Mil.
Total Assets was $8,676 Mil.
Property, Plant and Equipment(Net PPE) was $788 Mil.
Depreciation, Depletion and Amortization(DDA) was $111 Mil.
Selling, General & Admin. Expense(SGA) was $825 Mil.
Total Current Liabilities was $1,251 Mil.
Long-Term Debt was $2,025 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)|
|=||(427 / 2553.5)||/||(453 / 2466.7)|
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)|
|=||(343.4 / 2466.7)||/||(414.6 / 2553.5)|
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 - (2890.1 + 815.7) / 8584.7)||/||(1 - (2902.6 + 787.9) / 8676.1)|
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))|
|=||(110.5 / (110.5 + 787.9))||/||(121 / (121 + 815.7))|
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)|
|=||(793.2 / 2553.5)||/||(825.4 / 2466.7)|
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)|
|=||((2024.5 + 706.6) / 8584.7)||/||((2024.9 + 1250.7) / 8676.1)|
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|
|=||(363.9 - -49.6||-||423.8)||/||8584.7|
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.
Beam Inc has a M-score of -2.48 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
Beam Inc Annual Data
Beam Inc Quarterly Data