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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 * 1.4666||+||0.528 * 0.9841||+||0.404 * 1.379||+||0.892 * 1.0221||+||0.115 * 1.2926|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9658||+||4.679 * 0.0251||-||0.327 * 0.9365|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,474 Mil.|
Revenue was 2815 + 2030 + 1756 + 1805 = $8,406 Mil.
Gross Profit was 477 + 434 + 340 + 370.7 = $1,622 Mil.
Total Current Assets was $4,104 Mil.
Total Assets was $17,060 Mil.
Property, Plant and Equipment(Net PPE) was $4,440 Mil.
Depreciation, Depletion and Amortization(DDA) was $373 Mil.
Selling, General & Admin. Expense(SGA) was $459 Mil.
Total Current Liabilities was $2,943 Mil.
Long-Term Debt was $7,724 Mil.
Net Income was 0 + 338 + -127 + 54.9 = $266 Mil.
Non Operating Income was -2 + -46 + -61 + -30.5 = $-140 Mil.
Cash Flow from Operations was -469 + 422 + -386 + 409.7 = $-23 Mil.
|Accounts Receivable was $983 Mil.
Revenue was 2097 + 2172 + 1923 + 2032.4 = $8,224 Mil.
Gross Profit was 407 + 397 + 362 + 395.5 = $1,562 Mil.
Total Current Assets was $2,383 Mil.
Total Assets was $7,727 Mil.
Property, Plant and Equipment(Net PPE) was $2,547 Mil.
Depreciation, Depletion and Amortization(DDA) was $283 Mil.
Selling, General & Admin. Expense(SGA) was $465 Mil.
Total Current Liabilities was $2,280 Mil.
Long-Term Debt was $2,879 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)|
|=||(1474 / 8406)||/||(983.3 / 8224.4)|
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)|
|=||(1561.5 / 8224.4)||/||(1621.7 / 8406)|
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 - (4104 + 4440) / 17060)||/||(1 - (2382.6 + 2547.3) / 7727)|
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))|
|=||(283.2 / (283.2 + 2547.3))||/||(372.5 / (372.5 + 4440))|
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)|
|=||(459.3 / 8406)||/||(465.3 / 8224.4)|
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)|
|=||((7724 + 2943) / 17060)||/||((2879.4 + 2279.6) / 7727)|
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|
|=||(265.9 - -139.5||-||-23.3)||/||17060|
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 -1.71 signals that the company is likely to 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