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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.
Cal-Maine Foods Inc has a M-score of -2.69 suggests that the company is not a 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 -2.55.
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 * 1.0192||+||0.528 * 0.8765||+||0.404 * 0.7402||+||0.892 * 1.1276||+||0.115 * 1.0096|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2139||+||4.679 * -0.0351||-||0.327 * 0.9151|
|This Year (Feb14) TTM:||Last Year (Feb13) TTM:|
|Accounts Receivable was $98 Mil.|
Revenue was 395.522 + 354.275 + 319.528 + 325.933 = $1,395 Mil.
Gross Profit was 91.895 + 74.667 + 44.911 + 51.489 = $263 Mil.
Total Current Assets was $440 Mil.
Total Assets was $797 Mil.
Property, Plant and Equipment(Net PPE) was $307 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $172 Mil.
Total Current Liabilities was $129 Mil.
Long-Term Debt was $53 Mil.
Net Income was 42.853 + 26.106 + 8.756 + -3.833 = $74 Mil.
Non Operating Income was 12.566 + 0.748 + 1.864 + 0.926 = $16 Mil.
Cash Flow from Operations was 61.388 + 17.835 + -8.366 + 14.938 = $86 Mil.
|Accounts Receivable was $85 Mil.
Revenue was 360.373 + 328.87 + 272.928 + 275.245 = $1,237 Mil.
Gross Profit was 67.047 + 51.298 + 44.715 + 41.355 = $204 Mil.
Total Current Assets was $421 Mil.
Total Assets was $755 Mil.
Property, Plant and Equipment(Net PPE) was $269 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $125 Mil.
Total Current Liabilities was $132 Mil.
Long-Term Debt was $57 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)|
|=||(97.795 / 1395.258)||/||(85.1 / 1237.416)|
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)|
|=||(74.667 / 1237.416)||/||(91.895 / 1395.258)|
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 - (439.909 + 306.528) / 797.077)||/||(1 - (420.523 + 269.395) / 754.69)|
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))|
|=||(32.665 / (32.665 + 269.395))||/||(36.773 / (36.773 + 306.528))|
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)|
|=||(171.719 / 1395.258)||/||(125.458 / 1237.416)|
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)|
|=||((53.384 + 128.698) / 797.077)||/||((56.878 + 131.521) / 754.69)|
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|
|=||(73.882 - 16.104||-||85.795)||/||797.077|
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 -2.69 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