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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 -1.04. The lowest was -3.15. And the median was -2.63.
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 * 0.7004||+||0.528 * 1.2944||+||0.404 * 1.3038||+||0.892 * 0.8412||+||0.115 * 1.0555|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2735||+||4.679 * -0.0499||-||0.327 * 0.3094|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Aug16) TTM:||Last Year (Aug15) TTM:|
|Accounts Receivable was $109 Mil.|
Revenue was 239.845 + 303.02 + 449.76 + 545.975 = $1,539 Mil.
Gross Profit was -9.569 + 40.68 + 132.726 + 211.597 = $375 Mil.
Total Current Assets was $574 Mil.
Total Assets was $1,076 Mil.
Property, Plant and Equipment(Net PPE) was $405 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $175 Mil.
Total Current Liabilities was $75 Mil.
Long-Term Debt was $8 Mil.
Net Income was -30.936 + -0.376 + 64.164 + 109.23 = $142 Mil.
Non Operating Income was 0.194 + 1.654 + 10.367 + 1.234 = $13 Mil.
Cash Flow from Operations was -45.447 + 49.118 + 32.268 + 146.337 = $182 Mil.
|Accounts Receivable was $185 Mil.
Revenue was 609.895 + 403.011 + 437.556 + 378.617 = $1,829 Mil.
Gross Profit was 263.071 + 109.394 + 112.517 + 92.709 = $578 Mil.
Total Current Assets was $694 Mil.
Total Assets was $1,136 Mil.
Property, Plant and Equipment(Net PPE) was $364 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $250 Mil.
Long-Term Debt was $35 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)|
|=||(108.954 / 1538.6)||/||(184.925 / 1829.079)|
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)|
|=||(577.691 / 1829.079)||/||(375.434 / 1538.6)|
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 - (573.953 + 404.787) / 1075.972)||/||(1 - (693.716 + 363.705) / 1136.166)|
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))|
|=||(42.646 / (42.646 + 363.705))||/||(44.69 / (44.69 + 404.787))|
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)|
|=||(175.053 / 1538.6)||/||(163.411 / 1829.079)|
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)|
|=||((8.125 + 75.138) / 1075.972)||/||((34.591 + 249.618) / 1136.166)|
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|
|=||(142.082 - 13.449||-||182.276)||/||1075.972|
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 -2.67 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