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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 Cal-Maine Foods Inc was -0.97. The lowest was -3.13. And the median was -2.60.
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 Cal-Maine 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 * 1.0065||+||0.528 * 0.7369||+||0.404 * 0.8731||+||0.892 * 1.1048||+||0.115 * 1.1107|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9249||+||4.679 * -0.071||-||0.327 * 0.9699|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $119 Mil.|
Revenue was 378.617 + 356.944 + 371.582 + 395.522 = $1,503 Mil.
Gross Profit was 92.709 + 81.101 + 91.291 + 91.895 = $357 Mil.
Total Current Assets was $471 Mil.
Total Assets was $869 Mil.
Property, Plant and Equipment(Net PPE) was $339 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $141 Mil.
Long-Term Debt was $46 Mil.
Net Income was 36.603 + 27.655 + 31.492 + 42.853 = $139 Mil.
Non Operating Income was 1.389 + 2.157 + 1.625 + 12.566 = $18 Mil.
Cash Flow from Operations was 30.112 + 37.957 + 53.063 + 61.388 = $183 Mil.
|Accounts Receivable was $107 Mil.
Revenue was 354.275 + 319.528 + 325.933 + 360.373 = $1,360 Mil.
Gross Profit was 74.667 + 44.911 + 51.489 + 67.047 = $238 Mil.
Total Current Assets was $418 Mil.
Total Assets was $753 Mil.
Property, Plant and Equipment(Net PPE) was $277 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $117 Mil.
Long-Term Debt was $50 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)|
|=||(118.85 / 1502.665)||/||(106.883 / 1360.109)|
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)|
|=||(81.101 / 1360.109)||/||(92.709 / 1502.665)|
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 - (470.826 + 339.249) / 868.588)||/||(1 - (417.626 + 277.169) / 752.885)|
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))|
|=||(36.01 / (36.01 + 277.169))||/||(39.175 / (39.175 + 339.249))|
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)|
|=||(166.112 / 1502.665)||/||(162.556 / 1360.109)|
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)|
|=||((45.845 + 140.749) / 868.588)||/||((50.214 + 116.546) / 752.885)|
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|
|=||(138.603 - 17.737||-||182.52)||/||868.588|
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.
Cal-Maine Foods Inc has a M-score of -2.87 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
Cal-Maine Foods Inc Annual Data
Cal-Maine Foods Inc Quarterly Data