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Dow Chemical Co (NYSE:DOW)
Beneish M-Score
-2.99 (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 -2.99 suggests that the company is not a manipulator.

DOW' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.08
Current: -2.99

-3.13
-1.08

During the past 13 years, the highest Beneish M-Score of Dow Chemical Co was -1.08. The lowest was -3.13. And the median was -2.64.


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 * 0.8663+0.528 * 0.8656+0.404 * 0.9726+0.892 * 0.9811+0.115 * 1.0164
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0354+4.679 * -0.0562-0.327 * 1.0595
=-2.99

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $4,695 Mil.
Revenue was 12370 + 14384 + 14405 + 14917 = $56,076 Mil.
Gross Profit was 2835 + 2773 + 2629 + 2573 = $10,810 Mil.
Total Current Assets was $24,394 Mil.
Total Assets was $67,789 Mil.
Property, Plant and Equipment(Net PPE) was $18,066 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,709 Mil.
Selling, General & Admin. Expense(SGA) was $3,079 Mil.
Total Current Liabilities was $12,387 Mil.
Long-Term Debt was $17,867 Mil.
Net Income was 1478 + 819 + 937 + 967 = $4,201 Mil.
Non Operating Income was 831 + -8 + 206 + -202 = $827 Mil.
Cash Flow from Operations was 1258 + 2757 + 1775 + 1395 = $7,185 Mil.
Accounts Receivable was $5,524 Mil.
Revenue was 14461 + 14386 + 13734 + 14577 = $57,158 Mil.
Gross Profit was 2728 + 2318 + 2018 + 2474 = $9,538 Mil.
Total Current Assets was $25,062 Mil.
Total Assets was $69,233 Mil.
Property, Plant and Equipment(Net PPE) was $17,573 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,685 Mil.
Selling, General & Admin. Expense(SGA) was $3,031 Mil.
Total Current Liabilities was $12,226 Mil.
Long-Term Debt was $16,936 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)
=(4695 / 56076) / (5524 / 57158)
=0.08372566 / 0.09664439
=0.8663

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)
=(2773 / 57158) / (2835 / 56076)
=0.16687078 / 0.19277409
=0.8656

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 - (24394 + 18066) / 67789) / (1 - (25062 + 17573) / 69233)
=0.37364469 / 0.38418095
=0.9726

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
=56076 / 57158
=0.9811

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))
=(2685 / (2685 + 17573)) / (2709 / (2709 + 18066))
=0.13254023 / 0.13039711
=1.0164

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)
=(3079 / 56076) / (3031 / 57158)
=0.05490763 / 0.05302845
=1.0354

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)
=((17867 + 12387) / 67789) / ((16936 + 12226) / 69233)
=0.4462966 / 0.42121532
=1.0595

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
=(4201 - 827 - 7185) / 67789
=-0.0562

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 -2.99 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 own currency.

Dow Chemical Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.9350.91761.09390.59363.10770.82230.48481.09380.96760.9316
GMI 0.84951.12131.16361.39950.74420.86770.98510.94270.9530.9032
AQI 0.92640.98471.00471.02961.29080.94211.01830.9910.95460.9882
SGI 1.1531.06081.08931.07190.78231.19611.11760.94671.00521.019
DEPI 0.98541.0140.99390.97661.00330.9391.00511.07051.00221.0081
SGAI 0.93311.01471.02890.9841.6170.87710.95621.0841.05151.0079
LVGI 0.89580.94621.00361.13341.05051.01470.93080.9780.91791.0678
TATA -0.0365-0.0374-0.0624-0.1113-0.0447-0.0072-0.0033-0.0489-0.0953-0.0503
M-score -2.64-2.60-2.52-3.13-1.08-2.59-2.83-2.70-2.98-2.84

Dow Chemical Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.09381.0621.10650.95310.96760.99590.96841.00020.93160.8663
GMI 0.94270.89420.88420.94310.9530.98050.99210.9170.90320.8656
AQI 0.9910.98230.95791.30690.95460.95820.98170.70380.98820.9726
SGI 0.94670.94130.96710.99381.00521.01251.01741.02751.0190.9811
DEPI 1.07051.04551.03591.01811.00221.01591.02480.99351.00811.0164
SGAI 1.0841.11221.10641.04371.05151.02311.01531.03771.00791.0354
LVGI 0.9780.8990.95470.72520.91790.93580.98041.37821.06781.0595
TATA -0.0489-0.0545-0.0856-0.0707-0.0887-0.0861-0.0443-0.043-0.0437-0.0562
M-score -2.70-2.77-2.89-2.68-2.95-2.88-2.71-2.95-2.81-2.99
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