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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.
Equifax Inc has a M-score of -2.62 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Equifax Inc was -1.66. The lowest was -3.98. And the median was -2.69.
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 Equifax 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 * 1.0187||+||0.528 * 0.9902||+||0.404 * 1.0042||+||0.892 * 1.0642||+||0.115 * 0.9448|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9213||+||4.679 * -0.048||-||0.327 * 0.9687|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $345 Mil.|
Revenue was 613.9 + 584.5 + 578.5 + 572 = $2,349 Mil.
Gross Profit was 401.6 + 377.7 + 381.3 + 375.2 = $1,536 Mil.
Total Current Assets was $554 Mil.
Total Assets was $4,766 Mil.
Property, Plant and Equipment(Net PPE) was $292 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $714 Mil.
Total Current Liabilities was $760 Mil.
Long-Term Debt was $1,146 Mil.
Net Income was 92.8 + 83.9 + 76.7 + 83.5 = $337 Mil.
Non Operating Income was 0.5 + -2.1 + -14.8 + 0.6 = $-16 Mil.
Cash Flow from Operations was 152.8 + 65 + 191.9 + 171.6 = $581 Mil.
|Accounts Receivable was $319 Mil.
Revenue was 586.9 + 566.5 + 533.8 + 520 = $2,207 Mil.
Gross Profit was 388.7 + 371.4 + 337.3 + 331.6 = $1,429 Mil.
Total Current Assets was $513 Mil.
Total Assets was $4,374 Mil.
Property, Plant and Equipment(Net PPE) was $279 Mil.
Depreciation, Depletion and Amortization(DDA) was $173 Mil.
Selling, General & Admin. Expense(SGA) was $728 Mil.
Total Current Liabilities was $376 Mil.
Long-Term Debt was $1,429 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)|
|=||(345.3 / 2348.9)||/||(318.5 / 2207.2)|
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)|
|=||(377.7 / 2207.2)||/||(401.6 / 2348.9)|
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 - (554.2 + 292.3) / 4766.3)||/||(1 - (512.6 + 279.3) / 4373.6)|
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))|
|=||(173.3 / (173.3 + 279.3))||/||(199.2 / (199.2 + 292.3))|
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)|
|=||(713.7 / 2348.9)||/||(727.9 / 2207.2)|
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)|
|=||((1145.6 + 759.8) / 4766.3)||/||((1429.1 + 375.8) / 4373.6)|
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|
|=||(336.9 - -15.8||-||581.3)||/||4766.3|
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.
Equifax Inc has a M-score of -2.62 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
Equifax Inc Annual Data
Equifax Inc Quarterly Data