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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 -1.20. The lowest was -4.12. And the median was -2.59.
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 * 1.1282||+||0.528 * 1.0092||+||0.404 * 1.1053||+||0.892 * 0.9101||+||0.115 * 0.9541|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0778||+||4.679 * -0.0471||-||0.327 * 1.0433|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,180 Mil.|
Revenue was 1686.345 + 1622.273 + 1694.6 + 1787.582 = $6,791 Mil.
Gross Profit was 631.213 + 589.264 + 613.809 + 672.608 = $2,507 Mil.
Total Current Assets was $2,380 Mil.
Total Assets was $8,979 Mil.
Property, Plant and Equipment(Net PPE) was $854 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $1,691 Mil.
Total Current Liabilities was $1,640 Mil.
Long-Term Debt was $2,607 Mil.
Net Income was 118.29 + 99.356 + 141.825 + 186.098 = $546 Mil.
Non Operating Income was 2.854 + 13.522 + 1.295 + 0.367 = $18 Mil.
Cash Flow from Operations was 207.868 + 133.413 + 408.292 + 200.577 = $950 Mil.
|Accounts Receivable was $1,149 Mil.
Revenue was 1758.628 + 1715.501 + 1977.947 + 2009.575 = $7,462 Mil.
Gross Profit was 654.568 + 627.159 + 723.868 + 774.422 = $2,780 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 $1,724 Mil.
Total Current Liabilities was $1,614 Mil.
Long-Term Debt was $2,225 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)|
|=||(1180.146 / 6790.8)||/||(1149.414 / 7461.651)|
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)|
|=||(2780.017 / 7461.651)||/||(2506.894 / 6790.8)|
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 - (2379.756 + 853.584) / 8979.092)||/||(1 - (2737.125 + 827.908) / 8466.817)|
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))|
|=||(313.976 / (313.976 + 827.908))||/||(345.578 / (345.578 + 853.584))|
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)|
|=||(1690.912 / 6790.8)||/||(1723.866 / 7461.651)|
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)|
|=||((2607.066 + 1640.367) / 8979.092)||/||((2225.063 + 1613.705) / 8466.817)|
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|
|=||(545.569 - 18.038||-||950.15)||/||8979.092|
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