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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 -2.57.
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 * 1.0285||+||0.528 * 1.0265||+||0.404 * 1.1287||+||0.892 * 0.879||+||0.115 * 0.8963|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0709||+||4.679 * -0.0073||-||0.327 * 0.9679|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $6,917 Mil.|
Revenue was 7777 + 5444 + 4971 + 8878 = $27,070 Mil.
Gross Profit was 3535 + 2035 + 1887 + 3598 = $11,055 Mil.
Total Current Assets was $17,865 Mil.
Total Assets was $41,801 Mil.
Property, Plant and Equipment(Net PPE) was $9,649 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,380 Mil.
Selling, General & Admin. Expense(SGA) was $4,620 Mil.
Total Current Liabilities was $8,955 Mil.
Long-Term Debt was $8,126 Mil.
Net Income was 1226 + -253 + 235 + 940 = $2,148 Mil.
Non Operating Income was -16 + 9 + -33 + -101 = $-141 Mil.
Cash Flow from Operations was -1844 + 4161 + 200 + 78 = $2,595 Mil.
|Accounts Receivable was $7,651 Mil.
Revenue was 8036 + 6377 + 6269 + 10114 = $30,796 Mil.
Gross Profit was 3520 + 2704 + 2571 + 4115 = $12,910 Mil.
Total Current Assets was $19,319 Mil.
Total Assets was $46,175 Mil.
Property, Plant and Equipment(Net PPE) was $12,873 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,626 Mil.
Selling, General & Admin. Expense(SGA) was $4,908 Mil.
Total Current Liabilities was $10,732 Mil.
Long-Term Debt was $8,763 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)|
|=||(6917 / 27070)||/||(7651 / 30796)|
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)|
|=||(2035 / 30796)||/||(3535 / 27070)|
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 - (17865 + 9649) / 41801)||/||(1 - (19319 + 12873) / 46175)|
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))|
|=||(1626 / (1626 + 12873))||/||(1380 / (1380 + 9649))|
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)|
|=||(4620 / 27070)||/||(4908 / 30796)|
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)|
|=||((8126 + 8955) / 41801)||/||((8763 + 10732) / 46175)|
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|
|=||(2148 - -141||-||2595)||/||41801|
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 -2.54 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
E.I. du Pont de Nemours & Co Annual Data
E.I. du Pont de Nemours & Co Quarterly Data