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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.
Crane Co has a M-score of -2.40 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Crane Co was -1.94. The lowest was -3.41. And the median was -2.54.
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 Crane Co 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 * 1.1279||+||0.528 * 0.9924||+||0.404 * 1.1874||+||0.892 * 1.0482||+||0.115 * 1.0081|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0065||+||4.679 * -0.0093||-||0.327 * 1.3373|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $480 Mil.|
Revenue was 716.83 + 681.449 + 637.515 + 648.746 = $2,685 Mil.
Gross Profit was 254.096 + 226.851 + 216.198 + 222.721 = $920 Mil.
Total Current Assets was $1,170 Mil.
Total Assets was $3,553 Mil.
Property, Plant and Equipment(Net PPE) was $304 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $563 Mil.
Total Current Liabilities was $681 Mil.
Long-Term Debt was $749 Mil.
Net Income was 48.684 + 49.706 + 57.131 + 54.874 = $210 Mil.
Non Operating Income was -0.204 + 2.903 + -0.456 + 0.406 = $3 Mil.
Cash Flow from Operations was -18.91 + 148.433 + 80.454 + 30.948 = $241 Mil.
|Accounts Receivable was $406 Mil.
Revenue was 627.571 + 629.788 + 645.981 + 657.686 = $2,561 Mil.
Gross Profit was 217.752 + 211.704 + 219.833 + 221.591 = $871 Mil.
Total Current Assets was $1,185 Mil.
Total Assets was $2,850 Mil.
Property, Plant and Equipment(Net PPE) was $260 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $533 Mil.
Total Current Liabilities was $459 Mil.
Long-Term Debt was $399 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)|
|=||(479.963 / 2684.54)||/||(405.974 / 2561.026)|
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)|
|=||(226.851 / 2561.026)||/||(254.096 / 2684.54)|
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 - (1170.085 + 303.778) / 3553.345)||/||(1 - (1185.116 + 260.313) / 2850.103)|
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))|
|=||(55.299 / (55.299 + 260.313))||/||(63.902 / (63.902 + 303.778))|
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)|
|=||(562.74 / 2684.54)||/||(533.373 / 2561.026)|
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)|
|=||((749.181 + 680.973) / 3553.345)||/||((399.137 + 458.675) / 2850.103)|
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|
|=||(210.395 - 2.649||-||240.925)||/||3553.345|
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.
Crane Co has a M-score of -2.40 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
Crane Co Annual Data
Crane Co Quarterly Data