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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 * 1.0461||+||0.528 * 1.01||+||0.404 * 1.0777||+||0.892 * 0.9601||+||0.115 * 0.914|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0895||+||4.679 * -0.0551||-||0.327 * 1.055|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,199 Mil.|
Revenue was 1707.763 + 1686.345 + 1622.273 + 1694.6 = $6,711 Mil.
Gross Profit was 631.788 + 631.213 + 589.264 + 613.809 = $2,466 Mil.
Total Current Assets was $2,739 Mil.
Total Assets was $9,298 Mil.
Property, Plant and Equipment(Net PPE) was $839 Mil.
Depreciation, Depletion and Amortization(DDA) was $355 Mil.
Selling, General & Admin. Expense(SGA) was $1,716 Mil.
Total Current Liabilities was $1,891 Mil.
Long-Term Debt was $2,614 Mil.
Net Income was 130.084 + 118.29 + 99.356 + 141.825 = $490 Mil.
Non Operating Income was 3.424 + 2.854 + 13.522 + 1.295 = $21 Mil.
Cash Flow from Operations was 231.665 + 207.868 + 133.413 + 408.292 = $981 Mil.
|Accounts Receivable was $1,194 Mil.
Revenue was 1787.582 + 1758.628 + 1715.501 + 1727.876 = $6,990 Mil.
Gross Profit was 672.608 + 654.568 + 627.159 + 639.781 = $2,594 Mil.
Total Current Assets was $2,815 Mil.
Total Assets was $8,479 Mil.
Property, Plant and Equipment(Net PPE) was $824 Mil.
Depreciation, Depletion and Amortization(DDA) was $307 Mil.
Selling, General & Admin. Expense(SGA) was $1,641 Mil.
Total Current Liabilities was $1,669 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)|
|=||(1199.137 / 6710.981)||/||(1193.844 / 6989.587)|
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)|
|=||(2594.116 / 6989.587)||/||(2466.074 / 6710.981)|
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 - (2738.967 + 839.43) / 9298.283)||/||(1 - (2814.829 + 824.032) / 8478.82)|
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))|
|=||(307.429 / (307.429 + 824.032))||/||(355.127 / (355.127 + 839.43))|
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)|
|=||(1716.266 / 6710.981)||/||(1640.676 / 6989.587)|
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)|
|=||((2613.761 + 1891.071) / 9298.283)||/||((2224.943 + 1668.699) / 8478.82)|
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|
|=||(489.555 - 21.095||-||981.238)||/||9298.283|
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 -2.74 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