Switch to:
Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.46 (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.

Eastman Chemical Co has a M-score of -2.46 suggests that the company is not a manipulator.

EMN' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -1.65
Current: -2.46

-3.23
-1.65

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -1.65. The lowest was -3.23. And the median was -2.66.


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 Eastman 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 * 1.0439+0.528 * 1.2735+0.404 * 1.2211+0.892 * 1.0189+0.115 * 1.1281
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1488+4.679 * -0.0418-0.327 * 1.1936
=-2.46

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $936 Mil.
Revenue was 2349 + 2413 + 2460 + 2305 = $9,527 Mil.
Gross Profit was 333 + 636 + 657 + 595 = $2,221 Mil.
Total Current Assets was $3,173 Mil.
Total Assets was $16,072 Mil.
Property, Plant and Equipment(Net PPE) was $5,087 Mil.
Depreciation, Depletion and Amortization(DDA) was $450 Mil.
Selling, General & Admin. Expense(SGA) was $755 Mil.
Total Current Liabilities was $2,022 Mil.
Long-Term Debt was $7,248 Mil.
Net Income was 16 + 210 + 292 + 233 = $751 Mil.
Non Operating Income was -1 + 5 + 8 + 3 = $15 Mil.
Cash Flow from Operations was 459 + 560 + 419 + -30 = $1,408 Mil.
Accounts Receivable was $880 Mil.
Revenue was 2265 + 2338 + 2440 + 2307 = $9,350 Mil.
Gross Profit was 794 + 689 + 677 + 616 = $2,776 Mil.
Total Current Assets was $2,840 Mil.
Total Assets was $11,845 Mil.
Property, Plant and Equipment(Net PPE) was $4,290 Mil.
Depreciation, Depletion and Amortization(DDA) was $433 Mil.
Selling, General & Admin. Expense(SGA) was $645 Mil.
Total Current Liabilities was $1,470 Mil.
Long-Term Debt was $4,254 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)
=(936 / 9527) / (880 / 9350)
=0.09824709 / 0.09411765
=1.0439

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)
=(636 / 9350) / (333 / 9527)
=0.2968984 / 0.2331269
=1.2735

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 - (3173 + 5087) / 16072) / (1 - (2840 + 4290) / 11845)
=0.48606272 / 0.39805825
=1.2211

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
=9527 / 9350
=1.0189

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))
=(433 / (433 + 4290)) / (450 / (450 + 5087))
=0.09167902 / 0.08127145
=1.1281

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)
=(755 / 9527) / (645 / 9350)
=0.07924845 / 0.06898396
=1.1488

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)
=((7248 + 2022) / 16072) / ((4254 + 1470) / 11845)
=0.57677949 / 0.48324187
=1.1936

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
=(751 - 15 - 1408) / 16072
=-0.0418

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.

Eastman Chemical Co has a M-score of -2.46 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.

Eastman Chemical Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.86771.13030.79460.51151.54121.48050.94381.18590.90131.0439
GMI 0.7061.12821.06921.04250.71310.941.14251.00510.73251.2735
AQI 0.79050.87841.3850.86320.97210.99011.04193.29120.96511.2211
SGI 0.98181.04941.00750.98480.65361.32891.22871.12871.1541.0189
DEPI 1.04470.96170.8851.33740.95171.01180.99081.01880.86471.1281
SGAI 0.99370.91820.98551.0131.34010.88990.9021.18620.86791.1488
LVGI 0.85520.9331.02390.97381.01231.02250.92841.26770.92121.1936
TATA -0.0527-0.03-0.0562-0.0543-0.1104-0.00420.0002-0.0583-0.0109-0.0418
M-score -3.05-2.41-2.75-3.18-3.04-1.79-2.20-1.66-2.61-2.46

Eastman Chemical Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.21241.18591.1281.13030.83860.90130.92610.99610.99821.0439
GMI 1.14711.00510.93930.91990.85980.73250.76930.80.87771.2735
AQI 3.34623.29123.21194.3160.96930.96510.9580.99390.99691.2211
SGI 1.10671.12871.1861.27271.20871.1541.08851.0211.02041.0189
DEPI 1.12831.01880.91270.85820.77580.86470.96861.0491.02691.1281
SGAI 1.09491.18621.16421.17081.08240.86790.8560.83010.86251.1488
LVGI 1.271.26771.31770.92220.90250.92120.94960.97061.00151.1936
TATA -0.0468-0.0577-0.0491-0.0457-0.0384-0.0109-0.0094-0.0122-0.0318-0.0418
M-score -1.47-1.65-1.71-1.05-2.72-2.61-2.61-2.59-2.65-2.46
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK