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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 -1.85. 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 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 * 1.0188||+||0.528 * 1.012||+||0.404 * 1.3442||+||0.892 * 0.9331||+||0.115 * 1.0782|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1562||+||4.679 * -0.0424||-||0.327 * 1.1143|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $754 Mil.|
Revenue was 1804.6 + 2097 + 2172.3 + 1923.1 = $7,997 Mil.
Gross Profit was 370.6 + 406.7 + 397.2 + 362.2 = $1,537 Mil.
Total Current Assets was $2,184 Mil.
Total Assets was $9,777 Mil.
Property, Plant and Equipment(Net PPE) was $2,686 Mil.
Depreciation, Depletion and Amortization(DDA) was $286 Mil.
Selling, General & Admin. Expense(SGA) was $503 Mil.
Total Current Liabilities was $2,142 Mil.
Long-Term Debt was $5,054 Mil.
Net Income was 55.3 + 44.5 + 160.4 + 20.7 = $281 Mil.
Non Operating Income was -225.3 + -21 + -5 + -59.9 = $-311 Mil.
Cash Flow from Operations was 409.7 + 385.3 + 392.2 + -180.5 = $1,007 Mil.
|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 $467 Mil.
Total Current Liabilities was $2,007 Mil.
Long-Term Debt was $2,994 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)|
|=||(753.9 / 7997)||/||(793 / 8570)|
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)|
|=||(406.7 / 8570)||/||(370.6 / 7997)|
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 - (2184 + 2685.9) / 9777)||/||(1 - (2313.5 + 2430.7) / 7571)|
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))|
|=||(280.9 / (280.9 + 2430.7))||/||(285.5 / (285.5 + 2685.9))|
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)|
|=||(503.3 / 7997)||/||(466.5 / 8570)|
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)|
|=||((5054.2 + 2141.6) / 9777)||/||((2993.8 + 2006.8) / 7571)|
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|
|=||(280.9 - -311.2||-||1006.7)||/||9777|
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 -2.63 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