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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 -2.68.
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 * 0.9111||+||0.528 * 0.9837||+||0.404 * 1.0791||+||0.892 * 1.0477||+||0.115 * 0.96|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1291||+||4.679 * -0.0573||-||0.327 * 0.9718|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $437 Mil.|
Revenue was 375 + 499.3 + 406.2 + 375.4 = $1,656 Mil.
Gross Profit was 242.6 + 354.4 + 273.8 + 239 = $1,110 Mil.
Total Current Assets was $866 Mil.
Total Assets was $2,176 Mil.
Property, Plant and Equipment(Net PPE) was $31 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $685 Mil.
Total Current Liabilities was $960 Mil.
Long-Term Debt was $1,725 Mil.
Net Income was 30 + 76.7 + 59 + -7.9 = $158 Mil.
Non Operating Income was 0.8 + -36.1 + 4.3 + -1.5 = $-33 Mil.
Cash Flow from Operations was 130.5 + 53.3 + 72.2 + 58.9 = $315 Mil.
|Accounts Receivable was $458 Mil.
Revenue was 356.2 + 465.4 + 390.9 + 368 = $1,581 Mil.
Gross Profit was 225.2 + 322.6 + 250.5 + 243.7 = $1,042 Mil.
Total Current Assets was $896 Mil.
Total Assets was $2,028 Mil.
Property, Plant and Equipment(Net PPE) was $27 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $579 Mil.
Total Current Liabilities was $1,173 Mil.
Long-Term Debt was $1,403 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)|
|=||(437.4 / 1655.9)||/||(458.2 / 1580.5)|
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)|
|=||(1042 / 1580.5)||/||(1109.8 / 1655.9)|
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 - (865.8 + 30.9) / 2176)||/||(1 - (895.8 + 27.2) / 2027.7)|
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))|
|=||(49 / (49 + 27.2))||/||(62.7 / (62.7 + 30.9))|
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)|
|=||(684.8 / 1655.9)||/||(578.9 / 1580.5)|
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)|
|=||((1725.4 + 960.2) / 2176)||/||((1402.7 + 1172.5) / 2027.7)|
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|
|=||(157.8 - -32.5||-||314.9)||/||2176|
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 -2.78 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