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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.
E I du Pont de Nemours & Company has a M-score of -2.52 suggests that the company is not a 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 -2.61.
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 * 0.9766||+||0.528 * 0.9989||+||0.404 * 0.9619||+||0.892 * 1.0138||+||0.115 * 1.0257|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8688||+||4.679 * -0.0129||-||0.327 * 0.9538|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $8,896 Mil.|
Revenue was 10114 + 10145 + 7836 + 7805 = $35,900 Mil.
Gross Profit was 4115 + 4145 + 2703 + 2640 = $13,603 Mil.
Total Current Assets was $21,329 Mil.
Total Assets was $48,314 Mil.
Property, Plant and Equipment(Net PPE) was $13,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,646 Mil.
Selling, General & Admin. Expense(SGA) was $3,575 Mil.
Total Current Liabilities was $11,039 Mil.
Long-Term Debt was $9,292 Mil.
Net Income was 1070 + 1439 + 185 + 285 = $2,979 Mil.
Non Operating Income was -43 + -28 + -30 + -34 = $-135 Mil.
Cash Flow from Operations was 350 + -2421 + 5512 + 298 = $3,739 Mil.
|Accounts Receivable was $8,985 Mil.
Revenue was 10003 + 10500 + 7572 + 7336 = $35,411 Mil.
Gross Profit was 3947 + 4307 + 2592 + 2557 = $13,403 Mil.
Total Current Assets was $23,237 Mil.
Total Assets was $51,349 Mil.
Property, Plant and Equipment(Net PPE) was $12,698 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,650 Mil.
Selling, General & Admin. Expense(SGA) was $4,059 Mil.
Total Current Liabilities was $11,890 Mil.
Long-Term Debt was $10,765 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)|
|=||(8896 / 35900)||/||(8985 / 35411)|
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)|
|=||(4145 / 35411)||/||(4115 / 35900)|
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 - (21329 + 13035) / 48314)||/||(1 - (23237 + 12698) / 51349)|
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))|
|=||(1650 / (1650 + 12698))||/||(1646 / (1646 + 13035))|
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)|
|=||(3575 / 35900)||/||(4059 / 35411)|
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)|
|=||((9292 + 11039) / 48314)||/||((10765 + 11890) / 51349)|
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|
|=||(2979 - -135||-||3739)||/||48314|
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 -2.52 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 & Company Annual Data
E I du Pont de Nemours & Company Quarterly Data