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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 & Company was -1.73. The lowest was -3.10. 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 & Company 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 * 1.3161||+||0.528 * 0.9453||+||0.404 * 1.0779||+||0.892 * 0.9973||+||0.115 * 1.019|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1009||+||4.679 * -0.0002||-||0.327 * 0.9384|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $6,005 Mil.|
Revenue was 7919 + 7868 + 10114 + 10145 = $36,046 Mil.
Gross Profit was 3096 + 2988 + 4115 + 4145 = $14,344 Mil.
Total Current Assets was $21,748 Mil.
Total Assets was $49,876 Mil.
Property, Plant and Equipment(Net PPE) was $13,386 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,617 Mil.
Selling, General & Admin. Expense(SGA) was $4,027 Mil.
Total Current Liabilities was $12,640 Mil.
Long-Term Debt was $9,271 Mil.
Net Income was 683 + 433 + 1070 + 1439 = $3,625 Mil.
Non Operating Income was 0 + -33 + -43 + 0 = $-76 Mil.
Cash Flow from Operations was 5514 + 269 + 350 + -2421 = $3,712 Mil.
|Accounts Receivable was $4,575 Mil.
Revenue was 7836 + 7805 + 10003 + 10500 = $36,144 Mil.
Gross Profit was 2703 + 2639 + 3947 + 4307 = $13,596 Mil.
Total Current Assets was $24,384 Mil.
Total Assets was $51,499 Mil.
Property, Plant and Equipment(Net PPE) was $12,993 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,603 Mil.
Selling, General & Admin. Expense(SGA) was $3,668 Mil.
Total Current Liabilities was $13,367 Mil.
Long-Term Debt was $10,741 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)|
|=||(6005 / 36046)||/||(4575 / 36144)|
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)|
|=||(2988 / 36144)||/||(3096 / 36046)|
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 - (21748 + 13386) / 49876)||/||(1 - (24384 + 12993) / 51499)|
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))|
|=||(1603 / (1603 + 12993))||/||(1617 / (1617 + 13386))|
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)|
|=||(4027 / 36046)||/||(3668 / 36144)|
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)|
|=||((9271 + 12640) / 49876)||/||((10741 + 13367) / 51499)|
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|
|=||(3625 - -76||-||3712)||/||49876|
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 & Company has a M-score of -2.18 signals that the company is likely to 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 & Company Annual Data
E I du Pont de Nemours & Company Quarterly Data