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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 -2.61 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 * 0.9982||+||0.528 * 0.9764||+||0.404 * 1.0035||+||0.892 * 1.0883||+||0.115 * 0.9466|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9433||+||4.679 * -0.0458||-||0.327 * 0.9455|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $337 Mil.|
Revenue was 584.5 + 578.5 + 572 + 586.9 = $2,322 Mil.
Gross Profit was 377.7 + 381.3 + 375.2 + 388.7 = $1,523 Mil.
Total Current Assets was $525 Mil.
Total Assets was $4,750 Mil.
Property, Plant and Equipment(Net PPE) was $291 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $717 Mil.
Total Current Liabilities was $795 Mil.
Long-Term Debt was $1,146 Mil.
Net Income was 83.9 + 76.7 + 83.5 + 90.5 = $335 Mil.
Non Operating Income was -2.1 + -14.8 + 0.6 + 3.5 = $-13 Mil.
Cash Flow from Operations was 65 + 191.9 + 167.6 + 140.5 = $565 Mil.
|Accounts Receivable was $310 Mil.
Revenue was 566.5 + 533.8 + 520 + 513.3 = $2,134 Mil.
Gross Profit was 371.4 + 337.3 + 331.6 + 326.1 = $1,366 Mil.
Total Current Assets was $485 Mil.
Total Assets was $4,387 Mil.
Property, Plant and Equipment(Net PPE) was $281 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $698 Mil.
Total Current Liabilities was $450 Mil.
Long-Term Debt was $1,446 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)|
|=||(337.2 / 2321.9)||/||(310.4 / 2133.6)|
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)|
|=||(381.3 / 2133.6)||/||(377.7 / 2321.9)|
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 - (524.5 + 291) / 4750.1)||/||(1 - (484.8 + 281.1) / 4387.2)|
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))|
|=||(170.2 / (170.2 + 281.1))||/||(192.7 / (192.7 + 291))|
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)|
|=||(716.7 / 2321.9)||/||(698.2 / 2133.6)|
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 + 794.6) / 4750.1)||/||((1445.6 + 449.7) / 4387.2)|
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|
|=||(334.6 - -12.8||-||565)||/||4750.1|
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 -2.61 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