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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.
Ball Corp has a M-score of -2.93 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Ball Corp was -1.74. The lowest was -3.20. 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 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 * 0.9512||+||0.528 * 0.9215||+||0.404 * 1.0329||+||0.892 * 0.9981||+||0.115 * 1.0394|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0672||+||4.679 * -0.0791||-||0.327 * 0.9794|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $998 Mil.|
Revenue was 2291.9 + 2006.8 + 1996.8 + 2277.9 = $8,573 Mil.
Gross Profit was 445.5 + 393.9 + 410.7 + 431 = $1,681 Mil.
Total Current Assets was $2,420 Mil.
Total Assets was $7,771 Mil.
Property, Plant and Equipment(Net PPE) was $2,383 Mil.
Depreciation, Depletion and Amortization(DDA) was $291 Mil.
Selling, General & Admin. Expense(SGA) was $426 Mil.
Total Current Liabilities was $1,974 Mil.
Long-Term Debt was $3,129 Mil.
Net Income was 153.1 + 93.5 + 124.5 + 115.2 = $486 Mil.
Non Operating Income was 0 + -33.1 + 0 + -1.3 = $-34 Mil.
Cash Flow from Operations was 346.2 + -136.2 + 387.1 + 538.5 = $1,136 Mil.
|Accounts Receivable was $1,051 Mil.
Revenue was 2202.4 + 1991 + 2114.2 + 2282.5 = $8,590 Mil.
Gross Profit was 403.5 + 347.5 + 384.8 + 416.4 = $1,552 Mil.
Total Current Assets was $2,620 Mil.
Total Assets was $7,816 Mil.
Property, Plant and Equipment(Net PPE) was $2,306 Mil.
Depreciation, Depletion and Amortization(DDA) was $294 Mil.
Selling, General & Admin. Expense(SGA) was $400 Mil.
Total Current Liabilities was $1,767 Mil.
Long-Term Debt was $3,473 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)|
|=||(998 / 8573.4)||/||(1051.2 / 8590.1)|
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)|
|=||(393.9 / 8590.1)||/||(445.5 / 8573.4)|
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 - (2419.8 + 2383.3) / 7771.4)||/||(1 - (2619.5 + 2306.1) / 7815.6)|
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))|
|=||(294.4 / (294.4 + 2306.1))||/||(291.3 / (291.3 + 2383.3))|
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)|
|=||(425.5 / 8573.4)||/||(399.5 / 8590.1)|
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)|
|=||((3129.2 + 1973.6) / 7771.4)||/||((3472.6 + 1767.4) / 7815.6)|
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|
|=||(486.3 - -34.4||-||1135.6)||/||7771.4|
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 -2.93 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