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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 ConAgra Foods Inc was -1.26. The lowest was -3.19. And the median was -2.72.
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 ConAgra Foods Inc 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 * 1.1607||+||0.528 * 0.9074||+||0.404 * 0.8237||+||0.892 * 0.9754||+||0.115 * 1.0373|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4659||+||4.679 * -0.1407||-||0.327 * 0.9513|
|This Year (May16) TTM:||Last Year (May15) TTM:|
|Accounts Receivable was $837 Mil.|
Revenue was 2827.5 + 2924.1 + 3092.7 + 2793.8 = $11,638 Mil.
Gross Profit was 760.9 + 800.4 + 828 + 700.8 = $3,090 Mil.
Total Current Assets was $3,577 Mil.
Total Assets was $13,391 Mil.
Property, Plant and Equipment(Net PPE) was $2,710 Mil.
Depreciation, Depletion and Amortization(DDA) was $374 Mil.
Selling, General & Admin. Expense(SGA) was $2,209 Mil.
Total Current Liabilities was $2,532 Mil.
Long-Term Debt was $4,918 Mil.
Net Income was 117.6 + 204.6 + 154.9 + -1154.1 = $-677 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 512.3 + 377.1 + 251.2 + 66.8 = $1,207 Mil.
|Accounts Receivable was $739 Mil.
Revenue was 3125.5 + 2907.3 + 3136.4 + 2763 = $11,932 Mil.
Gross Profit was 806.6 + 720 + 757.3 + 590.8 = $2,875 Mil.
Total Current Assets was $3,563 Mil.
Total Assets was $17,438 Mil.
Property, Plant and Equipment(Net PPE) was $2,645 Mil.
Depreciation, Depletion and Amortization(DDA) was $380 Mil.
Selling, General & Admin. Expense(SGA) was $1,545 Mil.
Total Current Liabilities was $3,310 Mil.
Long-Term Debt was $6,889 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)|
|=||(836.6 / 11638.1)||/||(739 / 11932.2)|
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)|
|=||(2874.7 / 11932.2)||/||(3090.1 / 11638.1)|
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 - (3576.7 + 2710.3) / 13390.6)||/||(1 - (3563.3 + 2644.6) / 17437.8)|
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))|
|=||(380.4 / (380.4 + 2644.6))||/||(373.9 / (373.9 + 2710.3))|
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)|
|=||(2209.4 / 11638.1)||/||(1545.3 / 11932.2)|
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)|
|=||((4917.8 + 2532.4) / 13390.6)||/||((6888.8 + 3310.1) / 17437.8)|
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|
|=||(-677 - 0||-||1207.4)||/||13390.6|
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.
ConAgra Foods Inc has a M-score of -3.19 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
ConAgra Foods Inc Annual Data
ConAgra Foods Inc Quarterly Data