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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 E.I. du Pont de Nemours & Co was -1.73. The lowest was -3.56. And the median was -2.58.
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 E.I. du Pont de Nemours & 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 * 1.2395||+||0.528 * 0.9486||+||0.404 * 1.183||+||0.892 * 0.7435||+||0.115 * 0.926|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9748||+||4.679 * -0.0154||-||0.327 * 0.903|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $7,656 Mil.|
Revenue was 7112 + 7777 + 5444 + 4971 = $25,304 Mil.
Gross Profit was 3122 + 3535 + 2035 + 1887 = $10,579 Mil.
Total Current Assets was $18,091 Mil.
Total Assets was $42,266 Mil.
Property, Plant and Equipment(Net PPE) was $9,624 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,293 Mil.
Selling, General & Admin. Expense(SGA) was $4,460 Mil.
Total Current Liabilities was $8,378 Mil.
Long-Term Debt was $8,119 Mil.
Net Income was 1020 + 1226 + -253 + 235 = $2,228 Mil.
Non Operating Income was 63 + -16 + 9 + -33 = $23 Mil.
Cash Flow from Operations was 341 + -1844 + 4161 + 200 = $2,858 Mil.
|Accounts Receivable was $8,308 Mil.
Revenue was 8878 + 9370 + 7919 + 7868 = $34,035 Mil.
Gross Profit was 3598 + 3817 + 3095 + 2988 = $13,498 Mil.
Total Current Assets was $21,045 Mil.
Total Assets was $48,106 Mil.
Property, Plant and Equipment(Net PPE) was $13,061 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,609 Mil.
Selling, General & Admin. Expense(SGA) was $6,154 Mil.
Total Current Liabilities was $8,705 Mil.
Long-Term Debt was $12,088 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)|
|=||(7656 / 25304)||/||(8308 / 34035)|
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)|
|=||(13498 / 34035)||/||(10579 / 25304)|
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 - (18091 + 9624) / 42266)||/||(1 - (21045 + 13061) / 48106)|
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))|
|=||(1609 / (1609 + 13061))||/||(1293 / (1293 + 9624))|
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)|
|=||(4460 / 25304)||/||(6154 / 34035)|
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)|
|=||((8119 + 8378) / 42266)||/||((12088 + 8705) / 48106)|
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|
|=||(2228 - 23||-||2858)||/||42266|
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.
E.I. du Pont de Nemours & Co has a M-score of -2.49 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
E.I. du Pont de Nemours & Co Annual Data
E.I. du Pont de Nemours & Co Quarterly Data