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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 -2.08. The lowest was -2.78. And the median was -2.67.
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 (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $7,274 Mil.|
Revenue was 12389 + 12466 + 11649 + 12309 = $48,813 Mil.
Gross Profit was 13249 + 3498 + 2981 + 2665 = $22,393 Mil.
Total Current Assets was $15,176 Mil.
Total Assets was $84,186 Mil.
Property, Plant and Equipment(Net PPE) was $23,332 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,288 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $13,292 Mil.
Long-Term Debt was $12,676 Mil.
Net Income was 1499 + 2245 + 1917 + 1840 = $7,501 Mil.
Non Operating Income was 176 + 222 + 180 + 245 = $823 Mil.
Cash Flow from Operations was 3105 + 2936 + 2527 + 1212 = $9,780 Mil.
|Accounts Receivable was $6,694 Mil.
Revenue was 11568 + 11578 + 10554 + 11341 = $45,041 Mil.
Gross Profit was 2159 + 3004 + 2195 + 2092 = $9,450 Mil.
Total Current Assets was $14,109 Mil.
Total Assets was $81,241 Mil.
Property, Plant and Equipment(Net PPE) was $22,380 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,192 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $11,704 Mil.
Long-Term Debt was $13,050 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)|
|=||(7274 / 48813)||/||(6694 / 45041)|
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)|
|=||(3498 / 45041)||/||(13249 / 48813)|
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 - (15176 + 23332) / 84186)||/||(1 - (14109 + 22380) / 81241)|
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))|
|=||(2192 / (2192 + 22380))||/||(2288 / (2288 + 23332))|
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 / 48813)||/||(0 / 45041)|
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)|
|=||((12676 + 13292) / 84186)||/||((13050 + 11704) / 81241)|
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|
|=||(7501 - 823||-||9780)||/||84186|
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