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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

EMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: -1.04
Current: -2.78

-3.62
-1.04

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -1.04. The lowest was -3.62. 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 * 0.9755+0.528 * 0.8714+0.404 * 0.9952+0.892 * 0.9768+0.115 * 0.9006
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0211+4.679 * -0.04-0.327 * 0.9418
=-2.78

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $951 Mil.
Revenue was 2236 + 2225 + 2447 + 2533 = $9,441 Mil.
Gross Profit was 634 + 509 + 695 + 720 = $2,558 Mil.
Total Current Assets was $2,863 Mil.
Total Assets was $15,616 Mil.
Property, Plant and Equipment(Net PPE) was $5,185 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $765 Mil.
Total Current Liabilities was $1,847 Mil.
Long-Term Debt was $6,565 Mil.
Net Income was 251 + 124 + 256 + 297 = $928 Mil.
Non Operating Income was -12 + 10 + -13 + 0 = $-15 Mil.
Cash Flow from Operations was 47 + 562 + 368 + 591 = $1,568 Mil.
Accounts Receivable was $998 Mil.
Revenue was 2443 + 2349 + 2413 + 2460 = $9,665 Mil.
Gross Profit was 656 + 333 + 636 + 657 = $2,282 Mil.
Total Current Assets was $3,166 Mil.
Total Assets was $15,834 Mil.
Property, Plant and Equipment(Net PPE) was $4,957 Mil.
Depreciation, Depletion and Amortization(DDA) was $488 Mil.
Selling, General & Admin. Expense(SGA) was $767 Mil.
Total Current Liabilities was $1,764 Mil.
Long-Term Debt was $7,293 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)
=(951 / 9441) / (998 / 9665)
=0.10073085 / 0.10325918
=0.9755

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)
=(509 / 9665) / (634 / 9441)
=0.23610967 / 0.27094587
=0.8714

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 - (2863 + 5185) / 15616) / (1 - (3166 + 4957) / 15834)
=0.48463115 / 0.48699002
=0.9952

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
=9441 / 9665
=0.9768

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))
=(488 / (488 + 4957)) / (573 / (573 + 5185))
=0.08962351 / 0.09951372
=0.9006

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)
=(765 / 9441) / (767 / 9665)
=0.08102955 / 0.07935851
=1.0211

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)
=((6565 + 1847) / 15616) / ((7293 + 1764) / 15834)
=0.53867828 / 0.57199697
=0.9418

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
=(928 - -15 - 1568) / 15616
=-0.04

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 -2.78 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 1.12380.87330.51151.34241.69980.94381.18590.90131.04390.8355
GMI 1.16040.98221.04250.80240.82691.10431.05060.73251.27350.8718
AQI 0.87841.3850.86320.97210.99011.04193.32660.95481.22111.002
SGI 1.05540.91680.98480.75041.15751.22871.12871.1541.01891.0127
DEPI 0.96170.8851.33740.95171.01180.99081.01880.86471.12810.8114
SGAI 0.9121.04831.0131.26910.93320.88561.21650.86791.14880.9966
LVGI 0.9331.02390.97381.01231.02250.92841.27760.9141.19360.9622
TATA -0.0352-0.0766-0.0543-0.1104-0.00170.0084-0.0588-0.0109-0.0418-0.0495
M-score -2.41-2.91-3.18-3.08-1.79-2.17-1.63-2.61-2.46-2.93

Eastman Chemical Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.90130.92610.99610.99821.04390.96720.91710.94970.83550.9755
GMI 0.73250.76930.80.87771.27351.24821.21241.15450.87180.8714
AQI 0.95480.9580.99390.99691.22111.23871.20961.19521.0020.9952
SGI 1.1541.08851.0211.02041.01891.03391.03951.03481.01270.9768
DEPI 0.86470.96861.0491.02691.12811.01410.96230.92290.81140.9006
SGAI 0.86790.8560.83010.86251.14881.15551.19721.19070.99661.0211
LVGI 0.9140.94960.97061.00151.19361.15941.13291.13180.96220.9418
TATA -0.0108-0.0094-0.0122-0.0318-0.0418-0.0545-0.0643-0.0482-0.0495-0.04
M-score -2.61-2.61-2.59-2.65-2.46-2.58-2.71-2.65-2.93-2.78
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