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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 Walt Disney Co was -1.04. The lowest was -2.86. And the median was -2.55.
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 Walt Disney 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 * 0.9886||+||0.528 * 0.9863||+||0.404 * 0.9832||+||0.892 * 1.0845||+||0.115 * 1.0112|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8842||+||4.679 * -0.0387||-||0.327 * 1.01|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $8,591 Mil.|
Revenue was 13391 + 12389 + 12466 + 11649 = $49,895 Mil.
Gross Profit was 5735 + 13249 + 3498 + 2981 = $25,463 Mil.
Total Current Assets was $17,240 Mil.
Total Assets was $87,035 Mil.
Property, Plant and Equipment(Net PPE) was $23,660 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,319 Mil.
Selling, General & Admin. Expense(SGA) was $1,935 Mil.
Total Current Liabilities was $16,804 Mil.
Long-Term Debt was $12,167 Mil.
Net Income was 2182 + 1499 + 2245 + 1917 = $7,843 Mil.
Non Operating Income was 212 + 176 + 222 + 180 = $790 Mil.
Cash Flow from Operations was 1855 + 3105 + 2936 + 2527 = $10,423 Mil.
|Accounts Receivable was $8,013 Mil.
Revenue was 12309 + 11568 + 11578 + 10554 = $46,009 Mil.
Gross Profit was 5244 + 12716 + 3004 + 2195 = $23,159 Mil.
Total Current Assets was $15,763 Mil.
Total Assets was $83,166 Mil.
Property, Plant and Equipment(Net PPE) was $22,567 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,239 Mil.
Selling, General & Admin. Expense(SGA) was $2,018 Mil.
Total Current Liabilities was $15,696 Mil.
Long-Term Debt was $11,714 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)|
|=||(8591 / 49895)||/||(8013 / 46009)|
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)|
|=||(13249 / 46009)||/||(5735 / 49895)|
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 - (17240 + 23660) / 87035)||/||(1 - (15763 + 22567) / 83166)|
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))|
|=||(2239 / (2239 + 22567))||/||(2319 / (2319 + 23660))|
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)|
|=||(1935 / 49895)||/||(2018 / 46009)|
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)|
|=||((12167 + 16804) / 87035)||/||((11714 + 15696) / 83166)|
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|
|=||(7843 - 790||-||10423)||/||87035|
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.
Walt Disney Co 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
Walt Disney Co Annual Data
Walt Disney Co Quarterly Data