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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.
Colfax Corp has a M-score of -2.31 suggests that the company is not a manipulator.
During the past 10 years, the highest Beneish M-Score of Colfax Corp was 1.67. The lowest was -3.13. And the median was -2.45.
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 * 1.0578||+||0.528 * 0.9722||+||0.404 * 0.9986||+||0.892 * 1.0855||+||0.115 * 1.3175|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9033||+||4.679 * -0.0164||-||0.327 * 0.7704|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|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 $880 Mil.
Total Current Liabilities was $1,313 Mil.
Long-Term Debt was $1,108 Mil.
Net Income was 46.79 + 37.126 + 55.475 + 58.392 = $198 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -67.035 + 175.324 + 101.163 + 99.096 = $309 Mil.
|Accounts Receivable was $927 Mil.
Revenue was 947.143 + 1027.397 + 954.44 + 1045.653 = $3,975 Mil.
Gross Profit was 290.725 + 307.57 + 287.987 + 314.862 = $1,201 Mil.
Total Current Assets was $1,987 Mil.
Total Assets was $5,846 Mil.
Property, Plant and Equipment(Net PPE) was $676 Mil.
Depreciation, Depletion and Amortization(DDA) was $152 Mil.
Selling, General & Admin. Expense(SGA) was $898 Mil.
Total Current Liabilities was $1,267 Mil.
Long-Term Debt was $1,446 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)|
|=||(1064.02 / 4314.397)||/||(926.629 / 3974.633)|
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)|
|=||(357.381 / 3974.633)||/||(325.632 / 4314.397)|
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 - (2342.041 + 747.176) / 6771.224)||/||(1 - (1986.542 + 676.187) / 5846.321)|
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))|
|=||(151.509 / (151.509 + 676.187))||/||(120.556 / (120.556 + 747.176))|
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)|
|=||(880.098 / 4314.397)||/||(897.58 / 3974.633)|
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)|
|=||((1107.532 + 1313.24) / 6771.224)||/||((1445.657 + 1267.451) / 5846.321)|
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|
|=||(197.783 - 0||-||308.548)||/||6771.224|
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 -2.31 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