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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

EMR' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -2.36
Current: -2.6

-2.98
-2.36

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was -2.36. The lowest was -2.98. And the median was -2.56.


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 * 1.0495+0.528 * 0.9745+0.404 * 1.0009+0.892 * 0.9946+0.115 * 0.9461
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0173+4.679 * -0.0266-0.327 * 1.0512
=-2.60

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $5,019 Mil.
Revenue was 6807 + 6312 + 5812 + 5606 = $24,537 Mil.
Gross Profit was 2889 + 2638 + 2395 + 2236 = $10,158 Mil.
Total Current Assets was $10,867 Mil.
Total Assets was $24,177 Mil.
Property, Plant and Equipment(Net PPE) was $3,605 Mil.
Depreciation, Depletion and Amortization(DDA) was $831 Mil.
Selling, General & Admin. Expense(SGA) was $5,715 Mil.
Total Current Liabilities was $8,454 Mil.
Long-Term Debt was $3,559 Mil.
Net Income was 410 + 728 + 547 + 462 = $2,147 Mil.
Non Operating Income was -573 + -96 + -137 + -95 = $-901 Mil.
Cash Flow from Operations was 1408 + 1018 + 575 + 691 = $3,692 Mil.
Accounts Receivable was $4,808 Mil.
Revenue was 6812 + 6344 + 5960 + 5553 = $24,669 Mil.
Gross Profit was 2804 + 2568 + 2373 + 2207 = $9,952 Mil.
Total Current Assets was $10,999 Mil.
Total Assets was $24,711 Mil.
Property, Plant and Equipment(Net PPE) was $3,802 Mil.
Depreciation, Depletion and Amortization(DDA) was $819 Mil.
Selling, General & Admin. Expense(SGA) was $5,648 Mil.
Total Current Liabilities was $7,625 Mil.
Long-Term Debt was $4,055 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)
=(5019 / 24537) / (4808 / 24669)
=0.20454823 / 0.19490048
=1.0495

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)
=(2638 / 24669) / (2889 / 24537)
=0.4034213 / 0.41398704
=0.9745

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 - (10867 + 3605) / 24177) / (1 - (10999 + 3802) / 24711)
=0.40141457 / 0.40103598
=1.0009

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
=24537 / 24669
=0.9946

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))
=(819 / (819 + 3802)) / (831 / (831 + 3605))
=0.17723436 / 0.18733093
=0.9461

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)
=(5715 / 24537) / (5648 / 24669)
=0.23291356 / 0.22895132
=1.0173

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)
=((3559 + 8454) / 24177) / ((4055 + 7625) / 24711)
=0.4968772 / 0.472664
=1.0512

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
=(2147 - -901 - 3692) / 24177
=-0.0266

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 -2.60 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 1.00211.00081.02220.96710.96821.0520.98031.09820.95481.0495
GMI 0.99760.9890.99130.98920.97960.95031.0030.98610.99180.9745
AQI 1.00111.01440.9560.93741.11761.12470.94760.92080.9381.0009
SGI 1.10821.14041.12151.12090.81031.04661.15131.00781.01050.9946
DEPI 1.01120.99390.98820.95670.97550.86480.98731.06031.07190.9461
SGAI 0.98870.99420.99951.00541.12640.97920.96071.01231.02821.0173
LVGI 1.02390.97330.99521.03520.96581.00830.98981.0141.03091.0512
TATA -0.0327-0.029-0.039-0.0313-0.0689-0.0494-0.0166-0.0039-0.0306-0.0266
M-score -2.54-2.48-2.56-2.60-2.98-2.61-2.45-2.44-2.69-2.60

Emerson Electric Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.0041.09821.09751.02841.01440.95480.96951.00591.01061.0495
GMI 0.9980.98610.97870.97720.98290.99180.99650.99040.98190.9745
AQI 0.94460.92080.91670.9180.90430.9381.01481.01291.03771.0009
SGI 1.03141.00781.02751.02641.01241.01051.00270.9950.99940.9946
DEPI 1.03461.06031.04751.01731.02941.07191.03451.051.04840.9461
SGAI 0.98581.01230.99230.99731.02651.02821.03781.02731.01721.0173
LVGI 1.03961.0141.00210.9951.01831.03091.00341.06231.02881.0512
TATA -0.01430.01250.0030.00130.0002-0.0306-0.0327-0.0299-0.0293-0.0266
M-score -2.55-2.36-2.39-2.47-2.51-2.69-2.66-2.64-2.61-2.60
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