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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 Crane Co was 30513.62. The lowest was -3.45. 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 * 1.0538||+||0.528 * 0.9592||+||0.404 * 0.958||+||0.892 * 0.9559||+||0.115 * 1.0269|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0541||+||4.679 * 0.0034||-||0.327 * 0.9572|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $435 Mil.|
Revenue was 712.2 + 660 + 680.5 + 669.9 = $2,723 Mil.
Gross Profit was 263.1 + 233.9 + 239 + 238.2 = $974 Mil.
Total Current Assets was $1,309 Mil.
Total Assets was $3,432 Mil.
Property, Plant and Equipment(Net PPE) was $282 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $593 Mil.
Total Current Liabilities was $602 Mil.
Long-Term Debt was $745 Mil.
Net Income was 68.2 + 55 + 65.2 + 56.9 = $245 Mil.
Non Operating Income was -0.3 + -0.3 + -0.5 + -0.3 = $-1 Mil.
Cash Flow from Operations was 69.8 + -18 + 113.6 + 69.7 = $235 Mil.
|Accounts Receivable was $432 Mil.
Revenue was 711.2 + 678.8 + 730.7 + 727.4 = $2,848 Mil.
Gross Profit was 240.5 + 236.8 + 249.1 + 251.1 = $978 Mil.
Total Current Assets was $1,224 Mil.
Total Assets was $3,428 Mil.
Property, Plant and Equipment(Net PPE) was $283 Mil.
Depreciation, Depletion and Amortization(DDA) was $70 Mil.
Selling, General & Admin. Expense(SGA) was $588 Mil.
Total Current Liabilities was $656 Mil.
Long-Term Debt was $749 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)|
|=||(435.2 / 2722.6)||/||(432 / 2848.1)|
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)|
|=||(977.5 / 2848.1)||/||(974.2 / 2722.6)|
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 - (1308.5 + 281.7) / 3432.4)||/||(1 - (1224.4 + 283.1) / 3428.1)|
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))|
|=||(69.8 / (69.8 + 283.1))||/||(67.2 / (67.2 + 281.7))|
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)|
|=||(592.7 / 2722.6)||/||(588.2 / 2848.1)|
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)|
|=||((745 + 601.6) / 3432.4)||/||((749.2 + 655.8) / 3428.1)|
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|
|=||(245.3 - -1.4||-||235.1)||/||3432.4|
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 -2.48 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