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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.
Diamond Foods Inc has a M-score of -3.10 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Diamond Foods Inc was 0.01. The lowest was -3.57. And the median was -2.36.
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 Diamond Foods 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 * 1.1568||+||0.528 * 0.8748||+||0.404 * 0.9821||+||0.892 * 0.9524||+||0.115 * 0.9293|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.8483||+||4.679 * -0.1025||-||0.327 * 1.0543|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $87.7 Mil.|
Revenue was 190.892 + 220.577 + 234.668 + 199.801 = $845.9 Mil.
Gross Profit was 45.096 + 55.928 + 57.933 + 53.058 = $212.0 Mil.
Total Current Assets was $268.1 Mil.
Total Assets was $1,223.3 Mil.
Property, Plant and Equipment(Net PPE) was $131.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.5 Mil.
Selling, General & Admin. Expense(SGA) was $308.2 Mil.
Total Current Liabilities was $171.5 Mil.
Long-Term Debt was $638.4 Mil.
Net Income was -105.633 + -15.06 + -42.153 + -147.062 = $-309.9 Mil.
Non Operating Income was -83.004 + 0 + 0 + 0 = $-83.0 Mil.
Cash Flow from Operations was -163.682 + 48.926 + 12.837 + 0.397 = $-101.5 Mil.
|Accounts Receivable was $79.6 Mil.
Revenue was 184.905 + 220.844 + 258.462 + 223.989 = $888.2 Mil.
Gross Profit was 43.35 + 50.569 + 58.546 + 42.264 = $194.7 Mil.
Total Current Assets was $251.3 Mil.
Total Assets was $1,240.9 Mil.
Property, Plant and Equipment(Net PPE) was $138.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.3 Mil.
Selling, General & Admin. Expense(SGA) was $175.1 Mil.
Total Current Liabilities was $200.0 Mil.
Long-Term Debt was $579.2 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)|
|=||(87.721 / 845.938)||/||(79.619 / 888.2)|
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)|
|=||(55.928 / 888.2)||/||(45.096 / 845.938)|
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 - (268.118 + 131.033) / 1223.285)||/||(1 - (251.269 + 138.42) / 1240.9)|
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))|
|=||(31.322 / (31.322 + 138.42))||/||(32.467 / (32.467 + 131.033))|
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)|
|=||(308.248 / 845.938)||/||(175.102 / 888.2)|
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)|
|=||((638.351 + 171.515) / 1223.285)||/||((579.202 + 200.008) / 1240.9)|
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|
|=||(-309.908 - -83.004||-||-101.522)||/||1223.285|
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.
Diamond Foods Inc has a M-score of -3.10 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
Diamond Foods Inc Annual Data
Diamond Foods Inc Quarterly Data