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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 -2.02. The lowest was -2.78. And the median was -2.65.
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 * 1.0477||+||0.528 * 0.9968||+||0.404 * 0.9887||+||0.892 * 1.0604||+||0.115 * 1.0108|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9686||+||4.679 * -0.0499||-||0.327 * 1.097|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $8,458 Mil.|
Revenue was 13142 + 14277 + 12969 + 15244 = $55,632 Mil.
Gross Profit was 5837 + 7076 + 6105 + 6621 = $25,639 Mil.
Total Current Assets was $16,966 Mil.
Total Assets was $92,033 Mil.
Property, Plant and Equipment(Net PPE) was $27,349 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,527 Mil.
Selling, General & Admin. Expense(SGA) was $8,754 Mil.
Total Current Liabilities was $16,842 Mil.
Long-Term Debt was $16,483 Mil.
Net Income was 1771 + 2597 + 2143 + 2880 = $9,391 Mil.
Non Operating Income was 119 + 108 + 150 + 393 = $770 Mil.
Cash Flow from Operations was 3827 + 3624 + 3400 + 2362 = $13,213 Mil.
|Accounts Receivable was $7,613 Mil.
Revenue was 13512 + 13101 + 12461 + 13391 = $52,465 Mil.
Gross Profit was 6157 + 6438 + 5771 + 5735 = $24,101 Mil.
Total Current Assets was $16,758 Mil.
Total Assets was $88,182 Mil.
Property, Plant and Equipment(Net PPE) was $25,179 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,354 Mil.
Selling, General & Admin. Expense(SGA) was $8,523 Mil.
Total Current Liabilities was $16,334 Mil.
Long-Term Debt was $12,773 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)|
|=||(8458 / 55632)||/||(7613 / 52465)|
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)|
|=||(24101 / 52465)||/||(25639 / 55632)|
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 - (16966 + 27349) / 92033)||/||(1 - (16758 + 25179) / 88182)|
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))|
|=||(2354 / (2354 + 25179))||/||(2527 / (2527 + 27349))|
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)|
|=||(8754 / 55632)||/||(8523 / 52465)|
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)|
|=||((16483 + 16842) / 92033)||/||((12773 + 16334) / 88182)|
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|
|=||(9391 - 770||-||13213)||/||92033|
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 -2.65 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