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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 Canon Inc was 2163.67. The lowest was -3.62. And the median was -2.73.
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 Canon 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 * 0.9823||+||0.528 * 0.9941||+||0.404 * 1.4357||+||0.892 * 0.9844||+||0.115 * 1.073|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0287||+||4.679 * -0.061||-||0.327 * 1.4735|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $4,279 Mil.|
Revenue was 8165.53062195 + 7059.39961942 + 8571.85842891 + 7705.37239196 = $31,502 Mil.
Gross Profit was 4104.07504824 + 3583.98926077 + 4298.17075677 + 3905.35474699 = $15,892 Mil.
Total Current Assets was $16,826 Mil.
Total Assets was $43,804 Mil.
Property, Plant and Equipment(Net PPE) was $10,997 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,292 Mil.
Selling, General & Admin. Expense(SGA) was $10,568 Mil.
Total Current Liabilities was $12,923 Mil.
Long-Term Debt was $7 Mil.
Net Income was 507.333112484 + 247.857775983 + 566.481687014 + 409.329857608 = $1,731 Mil.
Non Operating Income was 107.374497987 + 42.0342561035 + 6.5441690303 + -34.7905409679 = $121 Mil.
Cash Flow from Operations was 1201.55594304 + 1014.96745378 + 1182.98187199 + 883.246939598 = $4,283 Mil.
|Accounts Receivable was $4,425 Mil.
Revenue was 7875.98631087 + 7121.9615514 + 8882.89210909 + 8119.17446198 = $32,000 Mil.
Gross Profit was 4072.08778632 + 3642.72454306 + 4316.12266841 + 4016.41320466 = $16,047 Mil.
Total Current Assets was $17,224 Mil.
Total Assets was $36,761 Mil.
Property, Plant and Equipment(Net PPE) was $10,196 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,316 Mil.
Selling, General & Admin. Expense(SGA) was $10,435 Mil.
Total Current Liabilities was $7,355 Mil.
Long-Term Debt was $9 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)|
|=||(4279.43187956 / 31502.1610622)||/||(4425.28447622 / 32000.0144333)|
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)|
|=||(16047.3482025 / 32000.0144333)||/||(15891.5898128 / 31502.1610622)|
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 - (16825.9027687 + 10996.8590681) / 43804.3054212)||/||(1 - (17223.8693293 + 10196.0901594) / 36761.4570485)|
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))|
|=||(2315.90853436 / (2315.90853436 + 10196.0901594))||/||(2292.35792888 / (2292.35792888 + 10996.8590681))|
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)|
|=||(10567.7437305 / 31502.1610622)||/||(10434.8266239 / 32000.0144333)|
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)|
|=||((6.73938238781 + 12922.6233473) / 43804.3054212)||/||((8.65674199352 + 7355.29661668) / 36761.4570485)|
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|
|=||(1731.00243309 - 121.162382153||-||4282.75220841)||/||43804.3054212|
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.
Canon Inc has a M-score of -2.77 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
Canon Inc Annual Data
Canon Inc Quarterly Data