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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.
Dover Corp has a M-score of -2.72 suggests that the company is not a 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 -2.59.
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 * 0.8667||+||0.528 * 1.0025||+||0.404 * 0.9681||+||0.892 * 1.0751||+||0.115 * 0.6467|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9986||+||4.679 * -0.0228||-||0.327 * 1.0815|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,303 Mil.|
Revenue was 2047.738 + 1884.647 + 2209.128 + 2252.349 = $8,394 Mil.
Gross Profit was 796.417 + 736.209 + 830.557 + 876.65 = $3,240 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 $437 Mil.
Selling, General & Admin. Expense(SGA) was $1,904 Mil.
Total Current Liabilities was $1,232 Mil.
Long-Term Debt was $2,596 Mil.
Net Income was 213.959 + 160.138 + 193.963 + 269.114 = $837 Mil.
Non Operating Income was 6.042 + -0.356 + 3.016 + -0.97 = $8 Mil.
Cash Flow from Operations was 276.785 + -16.164 + 422.961 + 346.042 = $1,030 Mil.
|Accounts Receivable was $1,399 Mil.
Revenue was 1932.411 + 1763.977 + 2013.831 + 2097.605 = $7,808 Mil.
Gross Profit was 755.818 + 681.618 + 773.744 + 810.139 = $3,021 Mil.
Total Current Assets was $3,049 Mil.
Total Assets was $10,349 Mil.
Property, Plant and Equipment(Net PPE) was $1,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $329 Mil.
Selling, General & Admin. Expense(SGA) was $1,774 Mil.
Total Current Liabilities was $1,975 Mil.
Long-Term Debt was $2,190 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)|
|=||(1303.431 / 8393.862)||/||(1398.829 / 7807.824)|
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)|
|=||(736.209 / 7807.824)||/||(796.417 / 8393.862)|
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 - (2903.529 + 821.589) / 8795.074)||/||(1 - (3048.885 + 1137.645) / 10349.256)|
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))|
|=||(329.251 / (329.251 + 1137.645))||/||(436.697 / (436.697 + 821.589))|
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)|
|=||(1904.197 / 8393.862)||/||(1773.667 / 7807.824)|
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)|
|=||((2596.344 + 1231.7) / 8795.074)||/||((2189.811 + 1975.099) / 10349.256)|
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|
|=||(837.174 - 7.732||-||1029.624)||/||8795.074|
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 -2.72 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