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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 Ball Corp was -1.34. The lowest was -3.75. And the median was -2.69.
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 Ball Corp 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 * 1.092||+||0.528 * 0.9958||+||0.404 * 1.3768||+||0.892 * 0.9227||+||0.115 * 1.0705|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0119||+||4.679 * -0.0354||-||0.327 * 1.1208|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $908 Mil.|
Revenue was 1756 + 1804.6 + 2097 + 2172.3 = $7,830 Mil.
Gross Profit was 340 + 370.6 + 406.7 + 397.2 = $1,515 Mil.
Total Current Assets was $2,323 Mil.
Total Assets was $10,059 Mil.
Property, Plant and Equipment(Net PPE) was $2,730 Mil.
Depreciation, Depletion and Amortization(DDA) was $293 Mil.
Selling, General & Admin. Expense(SGA) was $443 Mil.
Total Current Liabilities was $2,232 Mil.
Long-Term Debt was $5,408 Mil.
Net Income was -127 + 55.3 + 44.5 + 160.4 = $133 Mil.
Non Operating Income was -61 + -225.3 + -21 + -5 = $-312 Mil.
Cash Flow from Operations was -386 + 409.7 + 385.3 + 392.7 = $802 Mil.
|Accounts Receivable was $901 Mil.
Revenue was 1923 + 2032.4 + 2238.9 + 2291.9 = $8,486 Mil.
Gross Profit was 362 + 395.5 + 431.6 + 445.5 = $1,635 Mil.
Total Current Assets was $2,468 Mil.
Total Assets was $7,661 Mil.
Property, Plant and Equipment(Net PPE) was $2,424 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $475 Mil.
Total Current Liabilities was $2,039 Mil.
Long-Term Debt was $3,152 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)|
|=||(908 / 7829.9)||/||(901.2 / 8486.2)|
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)|
|=||(370.6 / 8486.2)||/||(340 / 7829.9)|
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 - (2323 + 2730) / 10059)||/||(1 - (2467.9 + 2423.6) / 7660.5)|
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))|
|=||(280.1 / (280.1 + 2423.6))||/||(292.5 / (292.5 + 2730))|
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)|
|=||(443.3 / 7829.9)||/||(474.8 / 8486.2)|
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)|
|=||((5408 + 2232) / 10059)||/||((3152.1 + 2039.3) / 7660.5)|
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|
|=||(133.2 - -312.3||-||801.7)||/||10059|
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.
Ball Corp has a M-score of -2.51 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
Ball Corp Annual Data
Ball Corp Quarterly Data