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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.58 (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 -2.58 suggests that the company is not a manipulator.

EMN' s 10-Year Beneish M-Score Range
Min: -3.62   Max: -0.95
Current: -2.58

-3.62
-0.95

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -0.95. The lowest was -3.62. And the median was -2.69.


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 * 0.9672+0.528 * 1.2482+0.404 * 1.2387+0.892 * 1.0339+0.115 * 1.0141
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1555+4.679 * -0.0545-0.327 * 1.1594
=-2.58

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 171 + 16 + 210 + 292 = $689 Mil.
Non Operating Income was 11 + -1 + 5 + 8 = $23 Mil.
Cash Flow from Operations was 91 + 459 + 560 + 419 = $1,529 Mil.
Accounts Receivable was $998 Mil.
Revenue was 2305 + 2265 + 2338 + 2440 = $9,348 Mil.
Gross Profit was 595 + 794 + 689 + 677 = $2,755 Mil.
Total Current Assets was $2,949 Mil.
Total Assets was $11,947 Mil.
Property, Plant and Equipment(Net PPE) was $4,301 Mil.
Depreciation, Depletion and Amortization(DDA) was $430 Mil.
Selling, General & Admin. Expense(SGA) was $642 Mil.
Total Current Liabilities was $1,259 Mil.
Long-Term Debt was $4,635 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)
=(998 / 9665) / (998 / 9348)
=0.10325918 / 0.1067608
=0.9672

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)
=(333 / 9348) / (656 / 9665)
=0.29471545 / 0.23610967
=1.2482

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 - (3166 + 4957) / 15834) / (1 - (2949 + 4301) / 11947)
=0.48699002 / 0.39315309
=1.2387

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
=9665 / 9348
=1.0339

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))
=(430 / (430 + 4301)) / (488 / (488 + 4957))
=0.09088988 / 0.08962351
=1.0141

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)
=(767 / 9665) / (642 / 9348)
=0.07935851 / 0.06867779
=1.1555

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)
=((7293 + 1764) / 15834) / ((4635 + 1259) / 11947)
=0.57199697 / 0.49334561
=1.1594

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
=(689 - 23 - 1529) / 15834
=-0.0545

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 -2.58 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.18591.1281.13030.83860.90130.92610.99610.99821.04390.9672
GMI 1.00510.93930.91990.85980.73250.76930.80.87771.27351.2482
AQI 3.29123.21194.3160.96930.96510.9580.99390.99691.22111.2387
SGI 1.12871.1861.27271.20871.1541.08851.0211.02041.01891.0339
DEPI 1.01880.91270.85820.77580.86470.96861.0491.02691.12811.0141
SGAI 1.18621.16421.17081.08240.86790.8560.83010.86251.14881.1555
LVGI 1.26771.31770.92220.90250.92120.94960.97061.00151.19361.1594
TATA -0.0577-0.0491-0.0457-0.0384-0.0109-0.0094-0.0122-0.0318-0.0418-0.0545
M-score -1.65-1.71-1.05-2.72-2.61-2.61-2.59-2.65-2.46-2.58
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