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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 -2.62.
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 * 0.9656||+||0.528 * 0.9447||+||0.404 * 1.0367||+||0.892 * 0.9855||+||0.115 * 0.9808|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9251||+||4.679 * -0.0144||-||0.327 * 0.9901|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $7,651 Mil.|
Revenue was 9370 + 7919 + 7868 + 10114 = $35,271 Mil.
Gross Profit was 3817 + 3095 + 2988 + 4115 = $14,015 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 $5,731 Mil.
Total Current Liabilities was $10,732 Mil.
Long-Term Debt was $8,763 Mil.
Net Income was 1031 + 683 + 433 + 1070 = $3,217 Mil.
Non Operating Income was -25 + -25 + -33 + -43 = $-126 Mil.
Cash Flow from Operations was -2123 + 5514 + 269 + 350 = $4,010 Mil.
|Accounts Receivable was $8,040 Mil.
Revenue was 10145 + 7836 + 7805 + 10003 = $35,789 Mil.
Gross Profit was 4145 + 2704 + 2639 + 3947 = $13,435 Mil.
Total Current Assets was $20,834 Mil.
Total Assets was $47,800 Mil.
Property, Plant and Equipment(Net PPE) was $13,003 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,607 Mil.
Selling, General & Admin. Expense(SGA) was $6,286 Mil.
Total Current Liabilities was $11,085 Mil.
Long-Term Debt was $9,298 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)|
|=||(7651 / 35271)||/||(8040 / 35789)|
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)|
|=||(3095 / 35789)||/||(3817 / 35271)|
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 - (19319 + 12873) / 46175)||/||(1 - (20834 + 13003) / 47800)|
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))|
|=||(1607 / (1607 + 13003))||/||(1626 / (1626 + 12873))|
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)|
|=||(5731 / 35271)||/||(6286 / 35789)|
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)|
|=||((8763 + 10732) / 46175)||/||((9298 + 11085) / 47800)|
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|
|=||(3217 - -126||-||4010)||/||46175|
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 -2.59 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