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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 * 1.2348||+||0.528 * 2.5914||+||0.404 * 1.802||+||0.892 * 0.6242||+||0.115 * 1.1214|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6022||+||4.679 * -0.0132||-||0.327 * 0.3758|
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $122 Mil.|
Revenue was 253.544 + 239.845 + 303.02 + 449.76 = $1,246 Mil.
Gross Profit was 3.948 + -9.569 + 40.68 + 132.726 = $168 Mil.
Total Current Assets was $485 Mil.
Total Assets was $1,063 Mil.
Property, Plant and Equipment(Net PPE) was $449 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $83 Mil.
Long-Term Debt was $7 Mil.
Net Income was -23.01 + -30.936 + -0.376 + 64.164 = $10 Mil.
Non Operating Income was 0.494 + 0.194 + 1.654 + 10.367 = $13 Mil.
Cash Flow from Operations was -24.742 + -45.447 + 49.118 + 32.268 = $11 Mil.
|Accounts Receivable was $158 Mil.
Revenue was 545.975 + 609.895 + 403.011 + 437.556 = $1,996 Mil.
Gross Profit was 211.597 + 263.071 + 109.394 + 112.517 = $697 Mil.
Total Current Assets was $740 Mil.
Total Assets was $1,192 Mil.
Property, Plant and Equipment(Net PPE) was $372 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $245 Mil.
Long-Term Debt was $23 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)|
|=||(121.65 / 1246.169)||/||(157.836 / 1996.437)|
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)|
|=||(696.579 / 1996.437)||/||(167.785 / 1246.169)|
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 - (484.727 + 448.547) / 1062.643)||/||(1 - (739.546 + 372.207) / 1192.307)|
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))|
|=||(42.831 / (42.831 + 372.207))||/||(45.46 / (45.46 + 448.547))|
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)|
|=||(166.055 / 1246.169)||/||(166.037 / 1996.437)|
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)|
|=||((7 + 82.515) / 1062.643)||/||((22.611 + 244.67) / 1192.307)|
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|
|=||(9.842 - 12.709||-||11.197)||/||1062.643|
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 -1.38 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