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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.23 (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.

Emerson Electric Co has a M-score of -2.23 suggests that the company is not a manipulator.

EMR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.14   Max: -2.48
Current: -2.23

-3.14
-2.48

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was -2.48. The lowest was -3.14. 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 Emerson Electric 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 * 0.9981+0.528 * 1.03+0.404 * 0.9551+0.892 * 0.8741+0.115 * 0.9936
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0088+4.679 * 0.0856-0.327 * 1.1079
=-2.23

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $3,842 Mil.
Revenue was 4713 + 5814 + 5503 + 5400 = $21,430 Mil.
Gross Profit was 1889 + 2368 + 2234 + 2166 = $8,657 Mil.
Total Current Assets was $9,694 Mil.
Total Assets was $21,552 Mil.
Property, Plant and Equipment(Net PPE) was $3,520 Mil.
Depreciation, Depletion and Amortization(DDA) was $810 Mil.
Selling, General & Admin. Expense(SGA) was $5,005 Mil.
Total Current Liabilities was $8,202 Mil.
Long-Term Debt was $4,043 Mil.
Net Income was 349 + 648 + 564 + 973 = $2,534 Mil.
Non Operating Income was -63 + -2542 + 0 + 849 = $-1,756 Mil.
Cash Flow from Operations was 487 + 1101 + 499 + 358 = $2,445 Mil.
Accounts Receivable was $4,404 Mil.
Revenue was 5587 + 6807 + 6312 + 5812 = $24,518 Mil.
Gross Profit was 2280 + 2889 + 2638 + 2395 = $10,202 Mil.
Total Current Assets was $10,483 Mil.
Total Assets was $23,724 Mil.
Property, Plant and Equipment(Net PPE) was $3,631 Mil.
Depreciation, Depletion and Amortization(DDA) was $829 Mil.
Selling, General & Admin. Expense(SGA) was $5,676 Mil.
Total Current Liabilities was $8,877 Mil.
Long-Term Debt was $3,289 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)
=(3842 / 21430) / (4404 / 24518)
=0.17928138 / 0.17962313
=0.9981

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)
=(2368 / 24518) / (1889 / 21430)
=0.41610246 / 0.4039664
=1.03

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 - (9694 + 3520) / 21552) / (1 - (10483 + 3631) / 23724)
=0.38687825 / 0.40507503
=0.9551

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
=21430 / 24518
=0.8741

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))
=(829 / (829 + 3631)) / (810 / (810 + 3520))
=0.18587444 / 0.18706697
=0.9936

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)
=(5005 / 21430) / (5676 / 24518)
=0.2335511 / 0.23150339
=1.0088

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)
=((4043 + 8202) / 21552) / ((3289 + 8877) / 23724)
=0.56816073 / 0.51281403
=1.1079

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
=(2534 - -1756 - 2445) / 21552
=0.0856

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.

Emerson Electric Co has a M-score of -2.23 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.

Emerson Electric Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 1.00081.02220.96710.96821.0520.98031.09820.95481.04950.9467
GMI 0.9890.99130.98920.97960.95031.0030.98610.99180.97451.0205
AQI 1.01440.9560.93741.11761.12470.94760.92080.9380.98060.9732
SGI 1.14041.12151.12090.81031.04661.15131.00781.01050.99460.909
DEPI 0.99390.98820.95670.97550.86480.98731.06031.07190.98810.9684
SGAI 0.99420.99951.00541.12640.97920.96071.01231.02821.01730.9979
LVGI 0.97330.99521.03520.96581.00830.98981.0141.03091.05121.1015
TATA -0.029-0.039-0.0419-0.0689-0.0494-0.0158-0.0039-0.0306-0.02660.0811
M-score -2.48-2.56-2.65-2.98-2.61-2.45-2.44-2.69-2.61-2.27

Emerson Electric Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.95480.96951.00591.01061.04951.00260.96040.94310.94670.9981
GMI 0.99180.99650.99040.98190.97450.97030.98390.99931.02051.03
AQI 0.9381.01481.01291.03770.98060.93190.91830.93310.97320.9551
SGI 1.01051.00270.9950.99940.99460.99170.9810.94930.9090.8741
DEPI 1.07191.03451.051.04840.98810.99130.97590.98090.96840.9936
SGAI 1.02821.03781.02731.01721.01731.00441.00751.00870.99791.0088
LVGI 1.03091.00341.06231.02881.05121.13061.0941.1151.10151.1079
TATA -0.0306-0.0367-0.0361-0.0392-0.0234-0.0157-0.0286-0.01290.08520.0856
M-score -2.69-2.68-2.67-2.66-2.59-2.65-2.74-2.71-2.25-2.23
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