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Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

EMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: -0.95
Current: -2.65

-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 * 0.9497+0.528 * 1.1545+0.404 * 1.1952+0.892 * 1.0348+0.115 * 0.9229
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1907+4.679 * -0.0482-0.327 * 1.1318
=-2.65

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
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 $796 Mil.
Total Current Liabilities was $1,800 Mil.
Long-Term Debt was $7,029 Mil.
Net Income was 256 + 297 + 171 + 16 = $740 Mil.
Non Operating Income was -13 + 0 + 11 + -1 = $-3 Mil.
Cash Flow from Operations was 368 + 591 + 91 + 459 = $1,509 Mil.
Accounts Receivable was $985 Mil.
Revenue was 2413 + 2460 + 2305 + 2265 = $9,443 Mil.
Gross Profit was 636 + 657 + 595 + 794 = $2,682 Mil.
Total Current Assets was $2,890 Mil.
Total Assets was $12,135 Mil.
Property, Plant and Equipment(Net PPE) was $4,352 Mil.
Depreciation, Depletion and Amortization(DDA) was $435 Mil.
Selling, General & Admin. Expense(SGA) was $646 Mil.
Total Current Liabilities was $1,398 Mil.
Long-Term Debt was $4,563 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)
=(968 / 9772) / (985 / 9443)
=0.09905853 / 0.10431007
=0.9497

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)
=(720 / 9443) / (695 / 9772)
=0.28401991 / 0.24600901
=1.1545

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 - (3182 + 5045) / 15880) / (1 - (2890 + 4352) / 12135)
=0.48192695 / 0.40321384
=1.1952

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
=9772 / 9443
=1.0348

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))
=(435 / (435 + 4352)) / (551 / (551 + 5045))
=0.09087111 / 0.09846319
=0.9229

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)
=(796 / 9772) / (646 / 9443)
=0.08145722 / 0.06841046
=1.1907

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)
=((7029 + 1800) / 15880) / ((4563 + 1398) / 12135)
=0.55598237 / 0.49122373
=1.1318

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
=(740 - -3 - 1509) / 15880
=-0.0482

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 -2.65 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 1.13030.79460.51151.54121.48050.94381.18590.90131.0439
GMI 1.12821.06921.04250.71310.941.14251.00510.73251.2735
AQI 0.87841.3850.86320.97210.99011.04193.29120.96511.2211
SGI 1.04941.00750.98480.65361.32891.22871.12871.1541.0189
DEPI 0.96170.8851.33740.95171.01180.99081.01880.86471.1281
SGAI 0.91820.98551.0131.34010.88990.9021.18620.86791.1488
LVGI 0.9331.02390.97381.01231.02250.92841.26770.92121.1936
TATA -0.03-0.0562-0.0543-0.1104-0.00420.0002-0.0583-0.0109-0.0418
M-score -2.41-2.75-3.18-3.04-1.79-2.20-1.66-2.61-2.46

Eastman Chemical Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.83860.90130.92610.99610.99821.04390.96720.91710.9497
GMI 0.85980.73250.76930.80.87771.27351.24821.21241.1545
AQI 0.96930.96510.9580.99390.99691.22111.23871.20961.1952
SGI 1.20871.1541.08851.0211.02041.01891.03391.03951.0348
DEPI 0.77580.86470.96861.0491.02691.12811.01410.96230.9229
SGAI 1.08240.86790.8560.83010.86251.14881.15551.19721.1907
LVGI 0.90250.92120.94960.97061.00151.19361.15941.13291.1318
TATA -0.0384-0.0109-0.0094-0.0122-0.0318-0.0418-0.0545-0.0643-0.0482
M-score -2.72-2.61-2.61-2.59-2.65-2.46-2.58-2.71-2.65
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