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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 -2.61.
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 * 0.9824||+||0.528 * 0.771||+||0.404 * 1.0162||+||0.892 * 1.1071||+||0.115 * 1.0391|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8485||+||4.679 * -0.0592||-||0.327 * 0.8709|
|This Year (Feb15) TTM:||Last Year (Feb14) TTM:|
|Accounts Receivable was $106 Mil.|
Revenue was 437.556 + 378.617 + 356.944 + 371.582 = $1,545 Mil.
Gross Profit was 112.517 + 92.709 + 81.101 + 91.291 = $378 Mil.
Total Current Assets was $494 Mil.
Total Assets was $901 Mil.
Property, Plant and Equipment(Net PPE) was $349 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $161 Mil.
Total Current Liabilities was $136 Mil.
Long-Term Debt was $43 Mil.
Net Income was 50.882 + 36.603 + 27.655 + 31.492 = $147 Mil.
Non Operating Income was 5.4 + 1.389 + 2.157 + 1.625 = $11 Mil.
Cash Flow from Operations was 68.285 + 30.112 + 37.957 + 53.063 = $189 Mil.
|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.
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)|
|=||(106.368 / 1544.699)||/||(97.795 / 1395.258)|
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)|
|=||(92.709 / 1395.258)||/||(112.517 / 1544.699)|
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 - (493.816 + 348.782) / 900.749)||/||(1 - (439.909 + 306.528) / 797.077)|
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))|
|=||(36.773 / (36.773 + 306.528))||/||(40.086 / (40.086 + 348.782))|
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)|
|=||(161.305 / 1544.699)||/||(171.719 / 1395.258)|
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)|
|=||((43.32 + 135.887) / 900.749)||/||((53.384 + 128.698) / 797.077)|
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|
|=||(146.632 - 10.571||-||189.417)||/||900.749|
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 -2.72 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