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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 11 years, the highest Beneish M-Score of Colfax Corp was 1.82. The lowest was -4.25. And the median was -2.46.
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 Colfax Corp 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 * 0.9183||+||0.528 * 0.9622||+||0.404 * 1.1235||+||0.892 * 1.0387||+||0.115 * 0.6622|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0841||+||4.679 * -0.0077||-||0.327 * 1.0807|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,015 Mil.|
Revenue was 911.07 + 1206.356 + 1164.453 + 1199.336 = $4,481 Mil.
Gross Profit was 294.438 + 391.847 + 373.195 + 388.171 = $1,448 Mil.
Total Current Assets was $2,023 Mil.
Total Assets was $6,945 Mil.
Property, Plant and Equipment(Net PPE) was $680 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $993 Mil.
Total Current Liabilities was $1,255 Mil.
Long-Term Debt was $1,428 Mil.
Net Income was 52.056 + 80.134 + 73.389 + 191.785 = $397 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -2.05 + 184.236 + 162.064 + 106.493 = $451 Mil.
|Accounts Receivable was $1,064 Mil.
Revenue was 1054.331 + 1171.378 + 1014.57 + 1074.118 = $4,314 Mil.
Gross Profit was 325.632 + 357.381 + 320.294 + 337.822 = $1,341 Mil.
Total Current Assets was $2,342 Mil.
Total Assets was $6,771 Mil.
Property, Plant and Equipment(Net PPE) was $747 Mil.
Depreciation, Depletion and Amortization(DDA) was $121 Mil.
Selling, General & Admin. Expense(SGA) was $882 Mil.
Total Current Liabilities was $1,313 Mil.
Long-Term Debt was $1,108 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)|
|=||(1014.905 / 4481.215)||/||(1064.02 / 4314.397)|
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)|
|=||(391.847 / 4314.397)||/||(294.438 / 4481.215)|
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 - (2022.602 + 679.658) / 6945.232)||/||(1 - (2342.041 + 747.176) / 6771.224)|
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))|
|=||(120.556 / (120.556 + 747.176))||/||(180.442 / (180.442 + 679.658))|
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)|
|=||(992.821 / 4481.215)||/||(881.726 / 4314.397)|
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)|
|=||((1428.227 + 1255.02) / 6945.232)||/||((1107.532 + 1313.24) / 6771.224)|
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|
|=||(397.364 - 0||-||450.743)||/||6945.232|
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.
Colfax Corp has a M-score of -2.61 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
Colfax Corp Annual Data
Colfax Corp Quarterly Data