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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 Dun & Bradstreet Corp was -2.43. The lowest was -2.89. And the median was -2.63.
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 Dun & Bradstreet Corp 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 * 1.0088||+||0.528 * 0.996||+||0.404 * 1.0897||+||0.892 * 1.0317||+||0.115 * 1.0312|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1192||+||4.679 * -0.0717||-||0.327 * 0.9613|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $524 Mil.|
Revenue was 499.3 + 406.2 + 375.4 + 376.2 = $1,657 Mil.
Gross Profit was 354.4 + 273.8 + 239 + 241.6 = $1,109 Mil.
Total Current Assets was $960 Mil.
Total Assets was $2,274 Mil.
Property, Plant and Equipment(Net PPE) was $27 Mil.
Depreciation, Depletion and Amortization(DDA) was $59 Mil.
Selling, General & Admin. Expense(SGA) was $677 Mil.
Total Current Liabilities was $959 Mil.
Long-Term Debt was $1,804 Mil.
Net Income was 76.7 + 59 + -7.9 + 41 = $169 Mil.
Non Operating Income was 7.2 + -18.4 + -1.5 + 1.4 = $-11 Mil.
Cash Flow from Operations was 53.3 + 72.2 + 58.9 + 158.8 = $343 Mil.
|Accounts Receivable was $503 Mil.
Revenue was 465.4 + 390.9 + 368 + 381.9 = $1,606 Mil.
Gross Profit was 322.6 + 250.5 + 243.7 + 253.6 = $1,070 Mil.
Total Current Assets was $933 Mil.
Total Assets was $1,986 Mil.
Property, Plant and Equipment(Net PPE) was $22 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $587 Mil.
Total Current Liabilities was $1,159 Mil.
Long-Term Debt was $1,352 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)|
|=||(523.5 / 1657.1)||/||(503 / 1606.2)|
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)|
|=||(273.8 / 1606.2)||/||(354.4 / 1657.1)|
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 - (959.6 + 27.2) / 2273.6)||/||(1 - (932.6 + 22) / 1986.2)|
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))|
|=||(52.5 / (52.5 + 22))||/||(58.7 / (58.7 + 27.2))|
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)|
|=||(677.2 / 1657.1)||/||(586.5 / 1606.2)|
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)|
|=||((1804.1 + 959.2) / 2273.6)||/||((1352.2 + 1158.9) / 1986.2)|
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|
|=||(168.8 - -11.3||-||343.2)||/||2273.6|
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.
Dun & Bradstreet Corp has a M-score of -2.75 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
Dun & Bradstreet Corp Annual Data
Dun & Bradstreet Corp Quarterly Data