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GuruFocus has detected 6 Warning Signs with E.I. du Pont de Nemours & Co $DD.
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E.I. du Pont de Nemours & Co (NYSE:DD)
Beneish M-Score
-2.44 (As of Today)

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 & Co has a M-score of -2.44 suggests that the company is not a manipulator.

DD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.96
Current: -2.44

-3.27
-1.96

During the past 13 years, the highest Beneish M-Score of E.I. du Pont de Nemours & Co was -1.96. The lowest was -3.27. And the median was -2.59.


Definition

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
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.14267647 / 0.13300035
=1.0728

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(10715 / 25827) / (10833 / 25302)
=0.41487591 / 0.42814797
=0.969

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.34070664 / 0.33996502
=1.0022

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=25302 / 25827
=0.9797

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))
=0.13031111 / 0.11993517
=1.0865

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)
=0.17069797 / 0.17868897
=0.9553

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)
=0.42548293 / 0.43623379
=0.9754

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2513 - -582 - 3300) / 39964
=-0.0051

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

E.I. du Pont de Nemours & Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0581.02031.140.77530.9360.86271.35180.7981.06991.0728
GMI 1.13450.99790.93370.96790.75360.97040.98660.93621.0280.969
AQI 1.11950.90840.9540.96511.41680.90280.86531.04011.1921.0022
SGI 1.01371.08370.85841.05751.19111.02580.83171.01070.87010.9797
DEPI 1.03910.97790.96071.09971.04130.87921.07910.78961.06741.0865
SGAI 1.03920.97631.11540.80050.96951.70631.09120.90591.08440.9553
LVGI 0.96731.12811.03410.97530.97821.01910.97180.97470.9560.9754
TATA -0.071-0.0162-0.0727-0.0365-0.0306-0.03980.0350.01030.014-0.0032
M-score -2.62-2.54-2.91-2.78-2.46-2.97-2.20-2.63-2.37-2.44

E.I. du Pont de Nemours & Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.30820.71990.89660.96940.82211.1861.08891.02181.12691.0728
GMI 0.8980.97070.95080.93660.99390.99150.99891.02881.02210.969
AQI 0.95181.04011.03671.00791.17641.1921.12871.1831.0221.0022
SGI 0.76891.12041.06140.96340.970.78490.83020.90180.9430.9797
DEPI 1.00920.78960.98081.02220.80871.06740.89630.9261.16291.0865
SGAI 1.5650.85610.79790.77770.71091.14751.111.05021.02170.9553
LVGI 1.00380.97470.99011.02710.91640.9560.96790.9030.98980.9754
TATA -0.00390.0107-0.0037-0.0061-0.01050.01310.01060.0037-0.0031-0.0051
M-score -2.59-2.57-2.51-2.57-2.60-2.37-2.47-2.43-2.39-2.44
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