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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 -2.23. The lowest was -2.89. And the median was -2.61.
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 * 1.0005||+||0.528 * 0.9984||+||0.404 * 0.9467||+||0.892 * 1.0161||+||0.115 * 0.9216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0555||+||4.679 * 0.0051||-||0.327 * 1.0091|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $527 Mil.|
Revenue was 489.8 + 417.1 + 393 + 381.9 = $1,682 Mil.
Gross Profit was 340 + 269.3 + 261.3 + 253.6 = $1,124 Mil.
Total Current Assets was $936 Mil.
Total Assets was $1,986 Mil.
Property, Plant and Equipment(Net PPE) was $27 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $625 Mil.
Total Current Liabilities was $1,159 Mil.
Long-Term Debt was $1,352 Mil.
Net Income was 91.7 + 67.5 + 49.9 + 85.3 = $294 Mil.
Non Operating Income was -0.3 + -7.5 + -0.2 + -23.3 = $-31 Mil.
Cash Flow from Operations was 38.8 + 55 + 61.2 + 160.5 = $316 Mil.
|Accounts Receivable was $519 Mil.
Revenue was 476.7 + 411.1 + 386.4 + 381 = $1,655 Mil.
Gross Profit was 314.4 + 279.2 + 256.3 + 254.8 = $1,105 Mil.
Total Current Assets was $822 Mil.
Total Assets was $1,890 Mil.
Property, Plant and Equipment(Net PPE) was $40 Mil.
Depreciation, Depletion and Amortization(DDA) was $71 Mil.
Selling, General & Admin. Expense(SGA) was $583 Mil.
Total Current Liabilities was $852 Mil.
Long-Term Debt was $1,516 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)|
|=||(527.1 / 1681.8)||/||(518.5 / 1655.2)|
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)|
|=||(269.3 / 1655.2)||/||(340 / 1681.8)|
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 - (935.9 + 27.4) / 1986.2)||/||(1 - (822.4 + 39.6) / 1890.3)|
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))|
|=||(71.2 / (71.2 + 39.6))||/||(63.1 / (63.1 + 27.4))|
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)|
|=||(624.7 / 1681.8)||/||(582.5 / 1655.2)|
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)|
|=||((1352.2 + 1158.9) / 1986.2)||/||((1516 + 852.3) / 1890.3)|
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|
|=||(294.4 - -31.3||-||315.5)||/||1986.2|
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 -2.49 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