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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 -1.94. The lowest was -3.41. And the median was -2.55.
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 * 1.0237||+||0.528 * 0.9876||+||0.404 * 1.1862||+||0.892 * 1.1306||+||0.115 * 0.8301|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0219||+||4.679 * -0.0217||-||0.327 * 1.4288|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $443 Mil.|
Revenue was 727.413 + 750.096 + 716.83 + 681.449 = $2,876 Mil.
Gross Profit was 251.122 + 262.065 + 254.096 + 226.851 = $994 Mil.
Total Current Assets was $1,226 Mil.
Total Assets was $3,554 Mil.
Property, Plant and Equipment(Net PPE) was $295 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $605 Mil.
Total Current Liabilities was $658 Mil.
Long-Term Debt was $749 Mil.
Net Income was 28.079 + 59.697 + 48.684 + 49.706 = $186 Mil.
Non Operating Income was 0.342 + -1.514 + -0.204 + 2.903 = $2 Mil.
Cash Flow from Operations was 68.16 + 64.184 + -18.91 + 148.433 = $262 Mil.
|Accounts Receivable was $382 Mil.
Revenue was 637.515 + 648.746 + 627.571 + 629.788 = $2,544 Mil.
Gross Profit was 216.198 + 222.721 + 217.752 + 211.704 = $868 Mil.
Total Current Assets was $1,220 Mil.
Total Assets was $2,858 Mil.
Property, Plant and Equipment(Net PPE) was $260 Mil.
Depreciation, Depletion and Amortization(DDA) was $52 Mil.
Selling, General & Admin. Expense(SGA) was $524 Mil.
Total Current Liabilities was $593 Mil.
Long-Term Debt was $199 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)|
|=||(442.535 / 2875.788)||/||(382.348 / 2543.62)|
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)|
|=||(262.065 / 2543.62)||/||(251.122 / 2875.788)|
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 - (1226.084 + 294.762) / 3554.105)||/||(1 - (1220.198 + 259.551) / 2858.145)|
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))|
|=||(52.3 / (52.3 + 259.551))||/||(74.632 / (74.632 + 294.762))|
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)|
|=||(605.242 / 2875.788)||/||(523.881 / 2543.62)|
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)|
|=||((749.202 + 657.91) / 3554.105)||/||((199.22 + 592.728) / 2858.145)|
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|
|=||(186.166 - 1.527||-||261.867)||/||3554.105|
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 -2.54 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