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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 -1.86. The lowest was -3.02. And the median was -2.69.
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 * 0.9641||+||0.528 * 0.9742||+||0.404 * 0.9705||+||0.892 * 1.0516||+||0.115 * 1.0548|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0908||+||4.679 * -0.0719||-||0.327 * 0.9866|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $387 Mil.|
Revenue was 412.8 + 398.8 + 375 + 499.3 = $1,686 Mil.
Gross Profit was 282.1 + 265.8 + 242.6 + 354.4 = $1,145 Mil.
Total Current Assets was $765 Mil.
Total Assets was $2,017 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $717 Mil.
Total Current Liabilities was $917 Mil.
Long-Term Debt was $1,586 Mil.
Net Income was -29.4 + 18.8 + 30 + 76.7 = $96 Mil.
Non Operating Income was -92.2 + -0.5 + 0.8 + -0.2 = $-92 Mil.
Cash Flow from Operations was 99.1 + 50.4 + 130.5 + 53.3 = $333 Mil.
|Accounts Receivable was $382 Mil.
Revenue was 406.2 + 375.4 + 356.2 + 465.4 = $1,603 Mil.
Gross Profit was 273.8 + 239 + 225.2 + 322.6 = $1,061 Mil.
Total Current Assets was $763 Mil.
Total Assets was $2,082 Mil.
Property, Plant and Equipment(Net PPE) was $24 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $625 Mil.
Total Current Liabilities was $860 Mil.
Long-Term Debt was $1,760 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)|
|=||(387.4 / 1685.9)||/||(382.1 / 1603.2)|
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)|
|=||(1060.6 / 1603.2)||/||(1144.9 / 1685.9)|
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 - (764.8 + 34) / 2016.9)||/||(1 - (762.9 + 23.6) / 2082.4)|
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))|
|=||(55 / (55 + 23.6))||/||(67 / (67 + 34))|
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)|
|=||(716.7 / 1685.9)||/||(624.8 / 1603.2)|
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)|
|=||((1586.4 + 916.5) / 2016.9)||/||((1759.9 + 859.5) / 2082.4)|
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|
|=||(96.1 - -92.1||-||333.3)||/||2016.9|
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 -2.83 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