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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 Dell Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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 Dell Inc 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 * 1.0278||+||0.528 * 1.0741||+||0.404 * 1.0916||+||0.892 * 0.939||+||0.115 * 0.9103|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0793||+||4.679 * -0.0666||-||0.327 * 0.9717|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jul13) TTM:||Last Year (Jul12) TTM:|
|Accounts Receivable was $6,591 Mil.|
Revenue was 14514 + 14074 + 14314 + 13721 = $56,623 Mil.
Gross Profit was 2689 + 2747 + 3109 + 2872 = $11,417 Mil.
Total Current Assets was $26,866 Mil.
Total Assets was $45,871 Mil.
Property, Plant and Equipment(Net PPE) was $2,212 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,265 Mil.
Selling, General & Admin. Expense(SGA) was $8,422 Mil.
Total Current Liabilities was $22,756 Mil.
Long-Term Debt was $4,075 Mil.
Net Income was 204 + 130 + 530 + 475 = $1,339 Mil.
Non Operating Income was -15 + -24 + 4 + 6 = $-29 Mil.
Cash Flow from Operations was 1678 + -39 + 1441 + 1343 = $4,423 Mil.
|Accounts Receivable was $6,829 Mil.
Revenue was 14483 + 14422 + 16031 + 15365 = $60,301 Mil.
Gross Profit was 3138 + 3067 + 3385 + 3469 = $13,059 Mil.
Total Current Assets was $27,250 Mil.
Total Assets was $44,097 Mil.
Property, Plant and Equipment(Net PPE) was $2,058 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,019 Mil.
Selling, General & Admin. Expense(SGA) was $8,310 Mil.
Total Current Liabilities was $20,712 Mil.
Long-Term Debt was $5,832 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)|
|=||(6591 / 56623)||/||(6829 / 60301)|
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)|
|=||(2747 / 60301)||/||(2689 / 56623)|
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 - (26866 + 2212) / 45871)||/||(1 - (27250 + 2058) / 44097)|
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))|
|=||(1019 / (1019 + 2058))||/||(1265 / (1265 + 2212))|
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)|
|=||(8422 / 56623)||/||(8310 / 60301)|
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)|
|=||((4075 + 22756) / 45871)||/||((5832 + 20712) / 44097)|
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|
|=||(1339 - -29||-||4423)||/||45871|
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.
Dell Inc has a M-score of -2.76 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
Dell Inc Annual Data
Dell Inc Quarterly Data