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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

EMN' s 10-Year Beneish M-Score Range
Min: -3.63   Max: -1.04
Current: -2.71

-3.63
-1.04

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -1.04. The lowest was -3.63. And the median was -2.70.


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 * 0.9171+0.528 * 1.2124+0.404 * 1.2096+0.892 * 1.0395+0.115 * 0.9623
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1972+4.679 * -0.0643-0.327 * 1.1329
=-2.71

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,021 Mil.
Revenue was 2533 + 2443 + 2349 + 2413 = $9,738 Mil.
Gross Profit was 720 + 656 + 333 + 636 = $2,345 Mil.
Total Current Assets was $3,167 Mil.
Total Assets was $15,886 Mil.
Property, Plant and Equipment(Net PPE) was $5,011 Mil.
Depreciation, Depletion and Amortization(DDA) was $520 Mil.
Selling, General & Admin. Expense(SGA) was $789 Mil.
Total Current Liabilities was $1,821 Mil.
Long-Term Debt was $7,072 Mil.
Net Income was 297 + 171 + 16 + 210 = $694 Mil.
Non Operating Income was 0 + 11 + -1 + 5 = $15 Mil.
Cash Flow from Operations was 591 + 91 + 459 + 560 = $1,701 Mil.
Accounts Receivable was $1,071 Mil.
Revenue was 2460 + 2305 + 2265 + 2338 = $9,368 Mil.
Gross Profit was 657 + 595 + 794 + 689 = $2,735 Mil.
Total Current Assets was $2,986 Mil.
Total Assets was $12,238 Mil.
Property, Plant and Equipment(Net PPE) was $4,343 Mil.
Depreciation, Depletion and Amortization(DDA) was $432 Mil.
Selling, General & Admin. Expense(SGA) was $634 Mil.
Total Current Liabilities was $1,274 Mil.
Long-Term Debt was $4,773 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)
=(1021 / 9738) / (1071 / 9368)
=0.10484699 / 0.11432536
=0.9171

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)
=(656 / 9368) / (720 / 9738)
=0.29195132 / 0.2408092
=1.2124

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 - (3167 + 5011) / 15886) / (1 - (2986 + 4343) / 12238)
=0.4852071 / 0.40112764
=1.2096

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
=9738 / 9368
=1.0395

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))
=(432 / (432 + 4343)) / (520 / (520 + 5011))
=0.0904712 / 0.09401555
=0.9623

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)
=(789 / 9738) / (634 / 9368)
=0.0810228 / 0.0676772
=1.1972

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)
=((7072 + 1821) / 15886) / ((4773 + 1274) / 12238)
=0.55980108 / 0.49411669
=1.1329

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
=(694 - 15 - 1701) / 15886
=-0.0643

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 -2.71 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 0.86771.13030.79460.51151.34241.69980.94381.18590.90131.0439
GMI 0.7061.12821.06921.04250.80240.82691.10431.05060.73251.2735
AQI 0.79050.87841.3850.86320.97210.99011.04193.32660.95481.2211
SGI 0.98181.04941.00750.98480.75041.15751.22871.12871.1541.0189
DEPI 1.04470.96170.8851.33740.95171.01180.99081.01880.86471.1281
SGAI 0.99370.91820.98551.0131.26910.93320.88561.21650.86791.1488
LVGI 0.85520.9331.02390.97381.01231.02250.92841.27760.9141.1936
TATA -0.0527-0.03-0.0562-0.0543-0.1104-0.00170.0084-0.0588-0.0109-0.0418
M-score -3.05-2.41-2.75-3.18-3.08-1.79-2.17-1.63-2.61-2.46

Eastman Chemical Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.1281.13030.83860.90130.92610.99610.99821.04390.96720.9171
GMI 0.99780.98350.92270.73250.76930.80.87771.27351.24821.2124
AQI 3.21194.3160.96930.95480.9580.99390.99691.22111.23871.2096
SGI 1.1861.27271.20871.1541.08851.0211.02041.01891.03391.0395
DEPI 0.91270.85820.77580.86470.96861.0491.02691.12811.01410.9623
SGAI 1.20531.21931.12660.86790.8560.83010.86251.14881.15551.1972
LVGI 1.31770.92220.90250.9140.94960.97061.00151.19361.15941.1329
TATA -0.0498-0.048-0.0409-0.0111-0.0094-0.0122-0.0318-0.0418-0.0545-0.0643
M-score -1.69-1.04-2.70-2.61-2.61-2.59-2.65-2.46-2.58-2.71
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