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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 -2.61.
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 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 * 1.1382||+||0.528 * 1.0248||+||0.404 * 1.0791||+||0.892 * 0.905||+||0.115 * 0.9715|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0511||+||4.679 * -0.0231||-||0.327 * 1.0253|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,167 Mil.|
Revenue was 1622.273 + 1694.6 + 1787.582 + 1758.628 = $6,863 Mil.
Gross Profit was 589.264 + 613.809 + 672.608 + 654.568 = $2,530 Mil.
Total Current Assets was $2,346 Mil.
Total Assets was $8,981 Mil.
Property, Plant and Equipment(Net PPE) was $859 Mil.
Depreciation, Depletion and Amortization(DDA) was $336 Mil.
Selling, General & Admin. Expense(SGA) was $1,656 Mil.
Total Current Liabilities was $1,649 Mil.
Long-Term Debt was $2,611 Mil.
Net Income was 99.356 + 141.825 + 186.098 + 332.396 = $760 Mil.
Non Operating Income was 13.522 + 1.295 + 0.367 + 1.256 = $16 Mil.
Cash Flow from Operations was 133.413 + 408.292 + 200.577 + 208.858 = $951 Mil.
|Accounts Receivable was $1,133 Mil.
Revenue was 1715.501 + 1727.876 + 2092.467 + 2047.738 = $7,584 Mil.
Gross Profit was 627.159 + 639.781 + 801.842 + 796.417 = $2,865 Mil.
Total Current Assets was $2,672 Mil.
Total Assets was $8,647 Mil.
Property, Plant and Equipment(Net PPE) was $822 Mil.
Depreciation, Depletion and Amortization(DDA) was $308 Mil.
Selling, General & Admin. Expense(SGA) was $1,741 Mil.
Total Current Liabilities was $1,782 Mil.
Long-Term Debt was $2,218 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)|
|=||(1167.313 / 6863.083)||/||(1133.213 / 7583.582)|
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)|
|=||(613.809 / 7583.582)||/||(589.264 / 6863.083)|
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 - (2345.756 + 858.984) / 8980.895)||/||(1 - (2671.551 + 821.736) / 8646.705)|
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))|
|=||(308.371 / (308.371 + 821.736))||/||(335.511 / (335.511 + 858.984))|
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)|
|=||(1656.196 / 6863.083)||/||(1741.117 / 7583.582)|
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)|
|=||((2610.642 + 1648.809) / 8980.895)||/||((2217.874 + 1782.054) / 8646.705)|
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|
|=||(759.675 - 16.44||-||951.14)||/||8980.895|
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 -2.52 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