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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 -2.04. The lowest was -3.01. 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 * 1.1561||+||0.528 * 1.0147||+||0.404 * 1.0499||+||0.892 * 0.9767||+||0.115 * 1.0027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0923||+||4.679 * -0.0452||-||0.327 * 1.1027|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,265 Mil.|
Revenue was 1777.961 + 1707.763 + 1686.345 + 1622.273 = $6,794 Mil.
Gross Profit was 619.704 + 631.788 + 631.213 + 589.264 = $2,472 Mil.
Total Current Assets was $2,589 Mil.
Total Assets was $10,116 Mil.
Property, Plant and Equipment(Net PPE) was $946 Mil.
Depreciation, Depletion and Amortization(DDA) was $361 Mil.
Selling, General & Admin. Expense(SGA) was $1,758 Mil.
Total Current Liabilities was $1,940 Mil.
Long-Term Debt was $3,207 Mil.
Net Income was 161.162 + 130.084 + 118.29 + 99.356 = $509 Mil.
Non Operating Income was 84.728 + 3.424 + 2.854 + 13.522 = $105 Mil.
Cash Flow from Operations was 289.029 + 231.665 + 207.868 + 133.413 = $862 Mil.
|Accounts Receivable was $1,120 Mil.
Revenue was 1694.6 + 1787.582 + 1758.628 + 1715.501 = $6,956 Mil.
Gross Profit was 613.809 + 672.608 + 654.568 + 627.159 = $2,568 Mil.
Total Current Assets was $2,419 Mil.
Total Assets was $8,606 Mil.
Property, Plant and Equipment(Net PPE) was $854 Mil.
Depreciation, Depletion and Amortization(DDA) was $327 Mil.
Selling, General & Admin. Expense(SGA) was $1,647 Mil.
Total Current Liabilities was $1,367 Mil.
Long-Term Debt was $2,604 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)|
|=||(1265.201 / 6794.342)||/||(1120.49 / 6956.311)|
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)|
|=||(2568.144 / 6956.311)||/||(2471.969 / 6794.342)|
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 - (2589.191 + 945.67) / 10115.991)||/||(1 - (2419.01 + 854.269) / 8606.076)|
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))|
|=||(327.089 / (327.089 + 854.269))||/||(360.739 / (360.739 + 945.67))|
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)|
|=||(1757.523 / 6794.342)||/||(1647.382 / 6956.311)|
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)|
|=||((3206.637 + 1940.318) / 10115.991)||/||((2603.655 + 1367.182) / 8606.076)|
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|
|=||(508.892 - 104.528||-||861.975)||/||10115.991|
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 -2.59 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