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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.77 (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 -2.77 suggests that the company is not a manipulator.

EMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: -0.94
Current: -2.77

-3.62
-0.94

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -0.94. The lowest was -3.62. And the median was -2.72.


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 * 1.0101+0.528 * 0.9393+0.404 * 0.9903+0.892 * 0.9256+0.115 * 0.9838
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9968+4.679 * -0.045-0.327 * 0.9451
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $905 Mil.
Revenue was 2287 + 2297 + 2236 + 2225 = $9,045 Mil.
Gross Profit was 621 + 605 + 634 + 509 = $2,369 Mil.
Total Current Assets was $2,900 Mil.
Total Assets was $15,489 Mil.
Property, Plant and Equipment(Net PPE) was $5,197 Mil.
Depreciation, Depletion and Amortization(DDA) was $578 Mil.
Selling, General & Admin. Expense(SGA) was $739 Mil.
Total Current Liabilities was $2,206 Mil.
Long-Term Debt was $5,933 Mil.
Net Income was 232 + 255 + 251 + 124 = $862 Mil.
Non Operating Income was -3 + 11 + -12 + 10 = $6 Mil.
Cash Flow from Operations was 450 + 494 + 47 + 562 = $1,553 Mil.
Accounts Receivable was $968 Mil.
Revenue was 2447 + 2533 + 2443 + 2349 = $9,772 Mil.
Gross Profit was 695 + 720 + 656 + 333 = $2,404 Mil.
Total Current Assets was $3,182 Mil.
Total Assets was $15,880 Mil.
Property, Plant and Equipment(Net PPE) was $5,045 Mil.
Depreciation, Depletion and Amortization(DDA) was $551 Mil.
Selling, General & Admin. Expense(SGA) was $801 Mil.
Total Current Liabilities was $1,800 Mil.
Long-Term Debt was $7,029 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)
=(905 / 9045) / (968 / 9772)
=0.10005528 / 0.09905853
=1.0101

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)
=(2404 / 9772) / (2369 / 9045)
=0.24600901 / 0.26191266
=0.9393

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 - (2900 + 5197) / 15489) / (1 - (3182 + 5045) / 15880)
=0.47724191 / 0.48192695
=0.9903

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
=9045 / 9772
=0.9256

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))
=(551 / (551 + 5045)) / (578 / (578 + 5197))
=0.09846319 / 0.10008658
=0.9838

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)
=(739 / 9045) / (801 / 9772)
=0.0817026 / 0.08196889
=0.9968

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)
=((5933 + 2206) / 15489) / ((7029 + 1800) / 15880)
=0.52546969 / 0.55598237
=0.9451

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
=(862 - 6 - 1553) / 15489
=-0.045

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 -2.77 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 local exchange's 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 0.87841.3850.86320.97210.99011.04193.29120.96511.22110.9999
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 0.9331.02390.97381.01231.02250.92841.26770.92121.19360.9607
TATA -0.0354-0.0766-0.0543-0.1104-0.00420.0002-0.0583-0.0109-0.0418-0.0496
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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.99610.99821.04390.96720.91710.94970.83550.97550.98541.0101
GMI 0.80.87771.27351.24821.21241.15450.87180.87140.90730.9393
AQI 0.99390.99691.22111.23871.20961.19520.99990.99520.99070.9903
SGI 1.0211.02041.01891.03391.03951.03481.01270.97680.94530.9256
DEPI 1.0491.02691.12811.01410.96230.92290.81140.90060.9380.9838
SGAI 0.83010.86251.14881.15551.19721.19820.99141.01570.99350.9968
LVGI 0.97061.00151.19361.15941.13291.13180.96070.94180.94820.9451
TATA -0.0122-0.0318-0.0418-0.0545-0.0643-0.0482-0.0496-0.04-0.0373-0.045
M-score -2.59-2.65-2.46-2.58-2.71-2.65-2.93-2.78-2.76-2.77
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