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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 -10000000.00. 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 * 1.0016||+||0.528 * 1.0001||+||0.404 * 0.9669||+||0.892 * 0.9704||+||0.115 * 1.0389|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * -0.1648||+||4.679 * -0.0147||-||0.327 * 1.0403|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $430 Mil.|
Revenue was 669.9 + 711.2 + 678.8 + 730.697 = $2,791 Mil.
Gross Profit was 238.2 + 240.5 + 236.8 + 249.103 = $965 Mil.
Total Current Assets was $1,240 Mil.
Total Assets was $3,403 Mil.
Property, Plant and Equipment(Net PPE) was $280 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $-20 Mil.
Total Current Liabilities was $652 Mil.
Long-Term Debt was $749 Mil.
Net Income was 56.9 + 55.8 + 51.1 + 56.172 = $220 Mil.
Non Operating Income was -0.3 + 0.4 + -0.3 + 3.775 = $4 Mil.
Cash Flow from Operations was 69.7 + 57.6 + -11.6 + 150.551 = $266 Mil.
|Accounts Receivable was $443 Mil.
Revenue was 727.4 + 750.1 + 716.8 + 681.449 = $2,876 Mil.
Gross Profit was 251.1 + 262.1 + 254.1 + 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 $125 Mil.
Total Current Liabilities was $658 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)|
|=||(430.1 / 2790.597)||/||(442.535 / 2875.749)|
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)|
|=||(240.5 / 2875.749)||/||(238.2 / 2790.597)|
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 - (1240.3 + 280.1) / 3402.7)||/||(1 - (1226.084 + 294.762) / 3554.105)|
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))|
|=||(74.678 / (74.678 + 294.762))||/||(67.666 / (67.666 + 280.1))|
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)|
|=||(-20.047 / 2790.597)||/||(125.384 / 2875.749)|
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)|
|=||((749.2 + 652.3) / 3402.7)||/||((749.202 + 657.91) / 3554.105)|
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|
|=||(219.972 - 3.575||-||266.251)||/||3402.7|
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