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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 -2.61.
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 * 1.6651||+||0.528 * 0.726||+||0.404 * 1.0772||+||0.892 * 1.2373||+||0.115 * 0.9804|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8865||+||4.679 * -0.0396||-||0.327 * 1.2116|
|This Year (Aug15) TTM:||Last Year (Aug14) TTM:|
|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 $139 Mil.
Total Current Liabilities was $250 Mil.
Long-Term Debt was $35 Mil.
Net Income was 143.023 + 46.114 + 50.882 + 36.603 = $277 Mil.
Non Operating Income was 0.522 + 2.782 + 5.4 + 1.389 = $10 Mil.
Cash Flow from Operations was 154.115 + 58.976 + 68.285 + 30.112 = $311 Mil.
|Accounts Receivable was $90 Mil.
Revenue was 356.944 + 371.582 + 395.522 + 354.275 = $1,478 Mil.
Gross Profit was 81.101 + 91.291 + 91.895 + 74.667 = $339 Mil.
Total Current Assets was $450 Mil.
Total Assets was $829 Mil.
Property, Plant and Equipment(Net PPE) was $326 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $127 Mil.
Total Current Liabilities was $123 Mil.
Long-Term Debt was $48 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)|
|=||(184.925 / 1829.079)||/||(89.762 / 1478.323)|
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)|
|=||(109.394 / 1478.323)||/||(263.071 / 1829.079)|
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 - (693.716 + 363.705) / 1136.166)||/||(1 - (449.607 + 326.39) / 829.358)|
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))|
|=||(37.433 / (37.433 + 326.39))||/||(42.646 / (42.646 + 363.705))|
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)|
|=||(138.91 / 1829.079)||/||(126.648 / 1478.323)|
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)|
|=||((34.591 + 249.618) / 1136.166)||/||((48.352 + 122.875) / 829.358)|
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|
|=||(276.622 - 10.093||-||311.488)||/||1136.166|
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 -2.01 signals that the company is likely to 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