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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 -3.04. And the median was -2.60.
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 * 1.0728||+||0.528 * 0.969||+||0.404 * 1.0022||+||0.892 * 0.9797||+||0.115 * 1.0865|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9553||+||4.679 * -0.0051||-||0.327 * 0.9754|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3,610 Mil.|
Revenue was 5512 + 4901 + 7112 + 7777 = $25,302 Mil.
Gross Profit was 2365 + 1811 + 3122 + 3535 = $10,833 Mil.
Total Current Assets was $17,117 Mil.
Total Assets was $39,964 Mil.
Property, Plant and Equipment(Net PPE) was $9,231 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,258 Mil.
Selling, General & Admin. Expense(SGA) was $4,319 Mil.
Total Current Liabilities was $8,897 Mil.
Long-Term Debt was $8,107 Mil.
Net Income was 265 + 2 + 1020 + 1226 = $2,513 Mil.
Non Operating Income was -426 + -203 + 63 + -16 = $-582 Mil.
Cash Flow from Operations was 4377 + 426 + 341 + -1844 = $3,300 Mil.
|Accounts Receivable was $3,435 Mil.
Revenue was 5444 + 4971 + 7376 + 8036 = $25,827 Mil.
Gross Profit was 2035 + 1887 + 3273 + 3520 = $10,715 Mil.
Total Current Assets was $17,387 Mil.
Total Assets was $41,166 Mil.
Property, Plant and Equipment(Net PPE) was $9,784 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,466 Mil.
Selling, General & Admin. Expense(SGA) was $4,615 Mil.
Total Current Liabilities was $10,316 Mil.
Long-Term Debt was $7,642 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)|
|=||(3610 / 25302)||/||(3435 / 25827)|
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)|
|=||(10715 / 25827)||/||(10833 / 25302)|
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 - (17117 + 9231) / 39964)||/||(1 - (17387 + 9784) / 41166)|
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))|
|=||(1466 / (1466 + 9784))||/||(1258 / (1258 + 9231))|
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)|
|=||(4319 / 25302)||/||(4615 / 25827)|
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)|
|=||((8107 + 8897) / 39964)||/||((7642 + 10316) / 41166)|
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|
|=||(2513 - -582||-||3300)||/||39964|
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 -2.44 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