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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 Dover Corp was -1.76. The lowest was -3.46. And the median was -2.60.
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 Dover 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 * 0.8733||+||0.528 * 1.0445||+||0.404 * 1.0043||+||0.892 * 1.0098||+||0.115 * 0.9414|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0209||+||4.679 * -0.014||-||0.327 * 1.0417|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,149 Mil.|
Revenue was 1758.628 + 1715.501 + 1727.876 + 2092.467 = $7,294 Mil.
Gross Profit was 654.568 + 627.159 + 639.781 + 801.842 = $2,723 Mil.
Total Current Assets was $2,737 Mil.
Total Assets was $8,467 Mil.
Property, Plant and Equipment(Net PPE) was $828 Mil.
Depreciation, Depletion and Amortization(DDA) was $314 Mil.
Selling, General & Admin. Expense(SGA) was $1,688 Mil.
Total Current Liabilities was $1,614 Mil.
Long-Term Debt was $2,225 Mil.
Net Income was 332.396 + 209.51 + 169.294 + 231.844 = $943 Mil.
Non Operating Income was 1.256 + 4.187 + -0.587 + 0.803 = $6 Mil.
Cash Flow from Operations was 206.141 + 134.049 + 425.06 + 290.262 = $1,056 Mil.
|Accounts Receivable was $1,303 Mil.
Revenue was 1962.636 + 1802.57 + 1518.497 + 1940.211 = $7,224 Mil.
Gross Profit was 768.099 + 707.86 + 584.808 + 756.347 = $2,817 Mil.
Total Current Assets was $2,904 Mil.
Total Assets was $8,795 Mil.
Property, Plant and Equipment(Net PPE) was $822 Mil.
Depreciation, Depletion and Amortization(DDA) was $287 Mil.
Selling, General & Admin. Expense(SGA) was $1,637 Mil.
Total Current Liabilities was $1,232 Mil.
Long-Term Debt was $2,596 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)|
|=||(1149.414 / 7294.472)||/||(1303.431 / 7223.914)|
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)|
|=||(627.159 / 7223.914)||/||(654.568 / 7294.472)|
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 - (2737.125 + 827.908) / 8466.817)||/||(1 - (2903.529 + 821.589) / 8795.074)|
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))|
|=||(286.943 / (286.943 + 821.589))||/||(313.976 / (313.976 + 827.908))|
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)|
|=||(1687.697 / 7294.472)||/||(1637.092 / 7223.914)|
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)|
|=||((2225.063 + 1613.705) / 8466.817)||/||((2596.344 + 1231.7) / 8795.074)|
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|
|=||(943.044 - 5.659||-||1055.512)||/||8466.817|
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.
Dover Corp has a M-score of -2.65 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
Dover Corp Annual Data
Dover Corp Quarterly Data