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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 -1.80. The lowest was -3.01. And the median was -2.70.
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 * 0.9808||+||0.528 * 0.9672||+||0.404 * 0.9792||+||0.892 * 1.012||+||0.115 * 1.0834|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2709||+||4.679 * -0.0629||-||0.327 * 1.0108|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $793 Mil.|
Revenue was 2032.4 + 2238.9 + 2291.9 + 2006.8 = $8,570 Mil.
Gross Profit was 395.5 + 431.6 + 445.5 + 393.9 = $1,667 Mil.
Total Current Assets was $2,314 Mil.
Total Assets was $7,571 Mil.
Property, Plant and Equipment(Net PPE) was $2,431 Mil.
Depreciation, Depletion and Amortization(DDA) was $281 Mil.
Selling, General & Admin. Expense(SGA) was $538 Mil.
Total Current Liabilities was $2,007 Mil.
Long-Term Debt was $2,994 Mil.
Net Income was 76 + 147.4 + 153.1 + 93.5 = $470 Mil.
Non Operating Income was -33.1 + 0 + 0 + -33.1 = $-66 Mil.
Cash Flow from Operations was 362.5 + 440 + 346.2 + -136.2 = $1,013 Mil.
|Accounts Receivable was $799 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.
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)|
|=||(793 / 8570)||/||(798.9 / 8468.1)|
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)|
|=||(431.6 / 8468.1)||/||(395.5 / 8570)|
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 - (2313.5 + 2430.7) / 7571)||/||(1 - (2465.7 + 2372.3) / 7819.8)|
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))|
|=||(299.9 / (299.9 + 2372.3))||/||(280.9 / (280.9 + 2430.7))|
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)|
|=||(538.4 / 8570)||/||(418.6 / 8468.1)|
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)|
|=||((2993.8 + 2006.8) / 7571)||/||((3182.5 + 1927.4) / 7819.8)|
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|
|=||(470 - -66.2||-||1012.5)||/||7571|
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 -2.85 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 Corp Annual Data
Ball Corp Quarterly Data