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Dow Chemical Co (NYSE:DOW)
Beneish M-Score
-2.40 (As of Today)

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.

Dow Chemical Co has a M-score of -2.40 suggests that the company is not a manipulator.

DOW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.18   Max: -1.37
Current: -2.4

-3.18
-1.37

During the past 13 years, the highest Beneish M-Score of Dow Chemical Co was -1.37. The lowest was -3.18. And the median was -2.65.


Definition

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 Dow Chemical Co 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 * 1.1589+0.528 * 1.0272+0.404 * 1.0578+0.892 * 0.9873+0.115 * 1.1391
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1264+4.679 * -0.0156-0.327 * 1.0336
=-2.40

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $4,666 Mil.
Revenue was 13020 + 12483 + 11952 + 10703 = $48,158 Mil.
Gross Profit was 2446 + 2642 + 2677 + 2752 = $10,517 Mil.
Total Current Assets was $23,659 Mil.
Total Assets was $79,511 Mil.
Property, Plant and Equipment(Net PPE) was $23,486 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,862 Mil.
Selling, General & Admin. Expense(SGA) was $3,304 Mil.
Total Current Liabilities was $12,604 Mil.
Long-Term Debt was $20,456 Mil.
Net Income was 52 + 804 + 3208 + 254 = $4,318 Mil.
Non Operating Income was -965 + 66 + 2178 + -1200 = $79 Mil.
Cash Flow from Operations was 1863 + 1345 + 2218 + 52 = $5,478 Mil.
Accounts Receivable was $4,078 Mil.
Revenue was 11462 + 12036 + 12910 + 12370 = $48,778 Mil.
Gross Profit was 2656 + 2687 + 2764 + 2835 = $10,942 Mil.
Total Current Assets was $23,941 Mil.
Total Assets was $67,938 Mil.
Property, Plant and Equipment(Net PPE) was $17,854 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,521 Mil.
Selling, General & Admin. Expense(SGA) was $2,971 Mil.
Total Current Liabilities was $11,115 Mil.
Long-Term Debt was $16,215 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(4666 / 48158) / (4078 / 48778)
=0.09688941 / 0.08360326
=1.1589

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(10942 / 48778) / (10517 / 48158)
=0.22432244 / 0.21838532
=1.0272

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (23659 + 23486) / 79511) / (1 - (23941 + 17854) / 67938)
=0.40706317 / 0.38480674
=1.0578

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=48158 / 48778
=0.9873

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))
=(2521 / (2521 + 17854)) / (2862 / (2862 + 23486))
=0.12373006 / 0.10862305
=1.1391

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)
=(3304 / 48158) / (2971 / 48778)
=0.0686075 / 0.06090861
=1.1264

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)
=((20456 + 12604) / 79511) / ((16215 + 11115) / 67938)
=0.41579153 / 0.40227855
=1.0336

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(4318 - 79 - 5478) / 79511
=-0.0156

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.

Dow Chemical Co has a M-score of -2.40 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Dow Chemical Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.09390.59363.10770.41970.94981.09380.96760.93161.0381.1589
GMI 1.16361.39950.74420.86770.98510.94270.9530.90320.82031.0272
AQI 1.00471.02961.29080.93051.0310.9910.95460.98611.00191.0578
SGI 1.08931.07190.78231.19611.11760.94671.00521.0190.83860.9873
DEPI 0.99390.97661.00330.9391.00511.07051.00221.00811.06751.1391
SGAI 1.02890.9841.6170.87710.95621.0841.05151.00791.14071.1264
LVGI 1.00361.13341.05051.01470.93080.9780.91791.06570.91131.0336
TATA -0.0624-0.1113-0.0447-0.0419-0.0291-0.0264-0.0956-0.0497-0.0689-0.0156
M-score -2.52-3.13-1.08-3.12-2.52-2.60-2.98-2.84-2.99-2.40

Dow Chemical Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.00020.93160.86630.95220.98341.0381.13861.22211.19721.1589
GMI 0.9170.90320.86560.82380.82360.82030.83630.87170.92931.0272
AQI 0.70380.98610.97260.96990.99651.00191.04361.06121.07741.0578
SGI 1.02751.0190.98110.94040.88880.83860.84010.85360.90140.9873
DEPI 0.99351.00811.01641.04271.10321.06751.09351.25791.18541.1391
SGAI 1.03771.00791.03541.07561.09481.14071.14471.12391.15071.1264
LVGI 1.37821.06571.05951.04940.98210.91130.91380.93760.93491.0336
TATA -0.0498-0.0497-0.0622-0.0578-0.0696-0.0689-0.039-0.0416-0.026-0.0156
M-score -2.98-2.84-3.02-2.98-3.01-2.99-2.73-2.62-2.50-2.40
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