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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 -2.51.
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 * 1.0054||+||0.528 * 0.9877||+||0.404 * 1.0312||+||0.892 * 0.8959||+||0.115 * 0.912|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0618||+||4.679 * -0.0188||-||0.327 * 0.9836|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $990 Mil.|
Revenue was 969.144 + 1025.375 + 911.07 + 1206.356 = $4,112 Mil.
Gross Profit was 295.874 + 328.037 + 294.438 + 391.847 = $1,310 Mil.
Total Current Assets was $1,999 Mil.
Total Assets was $7,040 Mil.
Property, Plant and Equipment(Net PPE) was $664 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General & Admin. Expense(SGA) was $928 Mil.
Total Current Liabilities was $1,205 Mil.
Long-Term Debt was $1,532 Mil.
Net Income was 18.359 + 53.127 + 52.056 + 80.134 = $204 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 85.269 + 68.919 + -2.05 + 184.236 = $336 Mil.
|Accounts Receivable was $1,099 Mil.
Revenue was 1164.453 + 1199.336 + 1054.331 + 1171.378 = $4,589 Mil.
Gross Profit was 373.195 + 388.171 + 325.632 + 357.381 = $1,444 Mil.
Total Current Assets was $2,218 Mil.
Total Assets was $7,529 Mil.
Property, Plant and Equipment(Net PPE) was $772 Mil.
Depreciation, Depletion and Amortization(DDA) was $162 Mil.
Selling, General & Admin. Expense(SGA) was $976 Mil.
Total Current Liabilities was $1,369 Mil.
Long-Term Debt was $1,608 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)|
|=||(990.452 / 4111.945)||/||(1099.494 / 4589.498)|
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)|
|=||(328.037 / 4589.498)||/||(295.874 / 4111.945)|
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 - (1999.092 + 664.2) / 7039.896)||/||(1 - (2218.072 + 772.115) / 7529.315)|
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))|
|=||(162.082 / (162.082 + 772.115))||/||(156.052 / (156.052 + 664.2))|
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)|
|=||(928.228 / 4111.945)||/||(975.744 / 4589.498)|
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)|
|=||((1532.267 + 1205.426) / 7039.896)||/||((1608.165 + 1368.785) / 7529.315)|
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|
|=||(203.676 - 0||-||336.374)||/||7039.896|
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 -2.67 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