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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.
Walt Disney Co has a M-score of signals that the company is a 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 -2.46.
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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $7,588 Mil.|
Revenue was 11649 + 12309 + 11568 + 11578 = $47,104 Mil.
Gross Profit was 2981 + 2665 + 2159 + 3004 = $10,809 Mil.
Total Current Assets was $15,046 Mil.
Total Assets was $82,580 Mil.
Property, Plant and Equipment(Net PPE) was $22,681 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,269 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $15,162 Mil.
Long-Term Debt was $10,909 Mil.
Net Income was 1917 + 1840 + 1394 + 1847 = $6,998 Mil.
Non Operating Income was 180 + 245 + 184 + 232 = $841 Mil.
Cash Flow from Operations was 2527 + 1212 + 2735 + 3413 = $9,887 Mil.
|Accounts Receivable was $7,154 Mil.
Revenue was 10554 + 11341 + 10782 + 11088 = $43,765 Mil.
Gross Profit was 2195 + 2092 + 2024 + 2960 = $9,271 Mil.
Total Current Assets was $15,003 Mil.
Total Assets was $81,358 Mil.
Property, Plant and Equipment(Net PPE) was $21,650 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,078 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $13,453 Mil.
Long-Term Debt was $13,381 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)|
|=||(7588 / 47104)||/||(7154 / 43765)|
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)|
|=||(2665 / 43765)||/||(2981 / 47104)|
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 - (15046 + 22681) / 82580)||/||(1 - (15003 + 21650) / 81358)|
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))|
|=||(2078 / (2078 + 21650))||/||(2269 / (2269 + 22681))|
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)|
|=||(0 / 47104)||/||(0 / 43765)|
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)|
|=||((10909 + 15162) / 82580)||/||((13381 + 13453) / 81358)|
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|
|=||(6998 - 841||-||9887)||/||82580|
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 signals that the company is likely to 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