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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.
Empire District Electric Co has a M-score of -3.03 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Empire District Electric Co was -2.59. The lowest was -4.56. And the median was -2.96.
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 Empire District Electric 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 * 0.8819||+||0.528 * 1.0054||+||0.404 * 0.7228||+||0.892 * 1.104||+||0.115 * 0.9287|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.2015||+||4.679 * -0.0407||-||0.327 * 1.0605|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $84.4 Mil.|
Revenue was 149.782 + 179.673 + 149.058 + 157.486 = $636.0 Mil.
Gross Profit was 65.137 + 81.085 + 70.816 + 85.331 = $302.4 Mil.
Total Current Assets was $178.8 Mil.
Total Assets was $2,207.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,816.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $76.0 Mil.
Selling, General & Admin. Expense(SGA) was $23.0 Mil.
Total Current Liabilities was $152.8 Mil.
Long-Term Debt was $743.3 Mil.
Net Income was 11.194 + 20.905 + 15.162 + 23.996 = $71.3 Mil.
Non Operating Income was 2.097 + 1.701 + 1.026 + 0.795 = $5.6 Mil.
Cash Flow from Operations was 14.472 + 54.572 + 39.81 + 46.636 = $155.5 Mil.
|Accounts Receivable was $86.7 Mil.
Revenue was 136.646 + 151.14 + 129.12 + 159.202 = $576.1 Mil.
Gross Profit was 64.873 + 66.775 + 57.843 + 85.877 = $275.4 Mil.
Total Current Assets was $179.2 Mil.
Total Assets was $2,168.6 Mil.
Property, Plant and Equipment(Net PPE) was $1,700.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.9 Mil.
Selling, General & Admin. Expense(SGA) was $9.5 Mil.
Total Current Liabilities was $86.5 Mil.
Long-Term Debt was $743.5 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)|
|=||(84.361 / 635.999)||/||(86.655 / 576.108)|
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)|
|=||(81.085 / 576.108)||/||(65.137 / 635.999)|
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 - (178.762 + 1816.193) / 2207.781)||/||(1 - (179.245 + 1700.16) / 2168.637)|
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))|
|=||(65.867 / (65.867 + 1700.16))||/||(75.993 / (75.993 + 1816.193))|
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)|
|=||(22.969 / 635.999)||/||(9.451 / 576.108)|
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)|
|=||((743.311 + 152.823) / 2207.781)||/||((743.541 + 86.5) / 2168.637)|
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|
|=||(71.257 - 5.619||-||155.49)||/||2207.781|
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.
Empire District Electric Co has a M-score of -3.03 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
Empire District Electric Co Annual Data
Empire District Electric Co Quarterly Data