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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.93 (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 -2.93 suggests that the company is not a manipulator.

EMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.23   Max: -1.65
Current: -2.93

-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 -2.71.


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 * 0.8355+0.528 * 0.8718+0.404 * 1.002+0.892 * 1.0127+0.115 * 0.8114
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9966+4.679 * -0.0495-0.327 * 0.9622
=-2.93

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $792 Mil.
Revenue was 2225 + 2447 + 2533 + 2443 = $9,648 Mil.
Gross Profit was 509 + 695 + 720 + 656 = $2,580 Mil.
Total Current Assets was $2,878 Mil.
Total Assets was $15,611 Mil.
Property, Plant and Equipment(Net PPE) was $5,130 Mil.
Depreciation, Depletion and Amortization(DDA) was $571 Mil.
Selling, General & Admin. Expense(SGA) was $762 Mil.
Total Current Liabilities was $2,056 Mil.
Long-Term Debt was $6,608 Mil.
Net Income was 124 + 256 + 297 + 171 = $848 Mil.
Non Operating Income was 10 + -13 + 0 + 11 = $8 Mil.
Cash Flow from Operations was 562 + 368 + 591 + 91 = $1,612 Mil.
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.



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)
=(792 / 9648) / (936 / 9527)
=0.08208955 / 0.09824709
=0.8355

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)
=(695 / 9527) / (509 / 9648)
=0.2331269 / 0.26741294
=0.8718

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 - (2878 + 5130) / 15611) / (1 - (3173 + 5087) / 16072)
=0.48702838 / 0.48606272
=1.002

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
=9648 / 9527
=1.0127

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))
=(450 / (450 + 5087)) / (571 / (571 + 5130))
=0.08127145 / 0.10015787
=0.8114

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)
=(762 / 9648) / (755 / 9527)
=0.0789801 / 0.07924845
=0.9966

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)
=((6608 + 2056) / 15611) / ((7248 + 2022) / 16072)
=0.55499327 / 0.57677949
=0.9622

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
=(848 - 8 - 1612) / 15611
=-0.0495

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 -2.93 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.13030.79460.51151.54121.48050.94381.18590.90131.04390.8355
GMI 1.12821.06921.04250.71310.941.14251.00510.73251.27350.8718
AQI 0.87841.3850.86320.97210.99011.04193.29120.96511.22111.002
SGI 1.04941.00750.98480.65361.32891.22871.12871.1541.01891.0127
DEPI 0.96170.8851.33740.95171.01180.99081.01880.86471.12810.8114
SGAI 0.91820.98551.0131.34010.88990.9021.18620.86791.14880.9966
LVGI 0.9331.02390.97381.01231.02250.92841.26770.92121.19360.9622
TATA -0.0354-0.0766-0.0543-0.1104-0.00420.0002-0.0583-0.0109-0.0418-0.0495
M-score -2.43-2.85-3.18-3.04-1.79-2.20-1.66-2.61-2.46-2.93

Eastman Chemical Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.90130.92610.99610.99821.04390.96720.91710.94970.8355
GMI 0.73250.76930.80.87771.27351.24821.21241.15450.8718
AQI 0.96510.9580.99390.99691.22111.23871.20961.19521.002
SGI 1.1541.08851.0211.02041.01891.03391.03951.03481.0127
DEPI 0.86470.96861.0491.02691.12811.01410.96230.92290.8114
SGAI 0.86790.8560.83010.86251.14881.15551.19721.19070.9966
LVGI 0.92120.94960.97061.00151.19361.15941.13291.13180.9622
TATA -0.0109-0.0094-0.0122-0.0318-0.0418-0.0545-0.0643-0.0482-0.0495
M-score -2.61-2.61-2.59-2.65-2.46-2.58-2.71-2.65-2.93
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