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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 DST Systems Inc was 0.00. The lowest was -2.38. And the median was -2.36.
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 DST Systems Inc 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $204 Mil.|
Revenue was 386.7 + 390.5 + 745.8 + 1734.3 = $3,257 Mil.
Gross Profit was 97.1 + 70.1 + 103.8 + 191.1 = $462 Mil.
Total Current Assets was $901 Mil.
Total Assets was $2,565 Mil.
Property, Plant and Equipment(Net PPE) was $237 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $929 Mil.
Long-Term Debt was $235 Mil.
Net Income was 273.3 + 53 + 58.1 + 67.8 = $452 Mil.
Non Operating Income was 13.7 + 17.2 + 13 + 21.2 = $65 Mil.
Cash Flow from Operations was 92.9 + 83.4 + -14.6 + 88 = $250 Mil.
|Accounts Receivable was $339 Mil.
Revenue was 371.6 + 363.5 + 702.3 + 706.5 = $2,144 Mil.
Gross Profit was 84.5 + 73.8 + 108.5 + 120.2 = $387 Mil.
Total Current Assets was $818 Mil.
Total Assets was $2,668 Mil.
Property, Plant and Equipment(Net PPE) was $422 Mil.
Depreciation, Depletion and Amortization(DDA) was $100 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $777 Mil.
Long-Term Debt was $608 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)|
|=||(204 / 3257.3)||/||(339.3 / 2143.9)|
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)|
|=||(387 / 2143.9)||/||(462.1 / 3257.3)|
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 - (901.2 + 236.7) / 2565.3)||/||(1 - (818.4 + 421.5) / 2667.5)|
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))|
|=||(99.5 / (99.5 + 421.5))||/||(125.1 / (125.1 + 236.7))|
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)|
|=||(0 / 3257.3)||/||(0 / 2143.9)|
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)|
|=||((234.6 + 928.5) / 2565.3)||/||((608.1 + 777.4) / 2667.5)|
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|
|=||(452.2 - 65.1||-||249.7)||/||2565.3|
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.
DST Systems Inc has a M-score of signals that the company is likely to 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
DST Systems Inc Annual Data
DST Systems Inc Quarterly Data