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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 Corporation has a M-score of -2.85 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Ball Corporation was -1.85. The lowest was -3.01. 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 Corporation 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 * 0.9532||+||0.528 * 0.9505||+||0.404 * 0.9902||+||0.892 * 0.9694||+||0.115 * 0.9848|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1202||+||4.679 * -0.0517||-||0.327 * 1.0282|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $859 Mil.|
Revenue was 1996.8 + 2277.9 + 2202.4 + 1991 = $8,468 Mil.
Gross Profit was 410.7 + 431 + 403.5 + 347.5 = $1,593 Mil.
Total Current Assets was $2,466 Mil.
Total Assets was $7,820 Mil.
Property, Plant and Equipment(Net PPE) was $2,372 Mil.
Depreciation, Depletion and Amortization(DDA) was $300 Mil.
Selling, General & Admin. Expense(SGA) was $419 Mil.
Total Current Liabilities was $1,927 Mil.
Long-Term Debt was $3,183 Mil.
Net Income was 124.5 + 115.2 + 95.1 + 72 = $407 Mil.
Non Operating Income was 0 + -1.3 + -26.7 + 0 = $-28 Mil.
Cash Flow from Operations was 387.1 + 509.4 + 267.1 + -324.6 = $839 Mil.
|Accounts Receivable was $930 Mil.
Revenue was 2114.2 + 2282.5 + 2296.3 + 2042.7 = $8,736 Mil.
Gross Profit was 384.8 + 416.4 + 405.5 + 355 = $1,562 Mil.
Total Current Assets was $2,339 Mil.
Total Assets was $7,507 Mil.
Property, Plant and Equipment(Net PPE) was $2,277 Mil.
Depreciation, Depletion and Amortization(DDA) was $283 Mil.
Selling, General & Admin. Expense(SGA) was $386 Mil.
Total Current Liabilities was $1,686 Mil.
Long-Term Debt was $3,085 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)|
|=||(859.4 / 8468.1)||/||(930.1 / 8735.7)|
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)|
|=||(431 / 8735.7)||/||(410.7 / 8468.1)|
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 - (2465.7 + 2372.3) / 7819.8)||/||(1 - (2339.4 + 2276.7) / 7507.1)|
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))|
|=||(282.9 / (282.9 + 2276.7))||/||(299.9 / (299.9 + 2372.3))|
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)|
|=||(418.6 / 8468.1)||/||(385.5 / 8735.7)|
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)|
|=||((3182.5 + 1927.4) / 7819.8)||/||((3085.3 + 1685.8) / 7507.1)|
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|
|=||(406.8 - -28||-||839)||/||7819.8|
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 Corporation has a M-score of -2.85 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 Corporation Annual Data
Ball Corporation Quarterly Data