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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

EMR' s Beneish M-Score Range Over the Past 10 Years
Min: -2.98   Max: -2.31
Current: -2.69

-2.98
-2.31

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was -2.31. The lowest was -2.98. And the median was -2.59.


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 * 1.0365+0.528 * 1.0219+0.404 * 0.9707+0.892 * 0.8694+0.115 * 1.0134
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0075+4.679 * -0.0217-0.327 * 1.073
=-2.69

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $3,874 Mil.
Revenue was 4928 + 4713 + 5814 + 5503 = $20,958 Mil.
Gross Profit was 1994 + 1889 + 2368 + 2234 = $8,485 Mil.
Total Current Assets was $9,913 Mil.
Total Assets was $21,764 Mil.
Property, Plant and Equipment(Net PPE) was $3,523 Mil.
Depreciation, Depletion and Amortization(DDA) was $800 Mil.
Selling, General & Admin. Expense(SGA) was $4,905 Mil.
Total Current Liabilities was $8,182 Mil.
Long-Term Debt was $4,062 Mil.
Net Income was 369 + 349 + 648 + 564 = $1,930 Mil.
Non Operating Income was -76 + -63 + -142 + -122 = $-403 Mil.
Cash Flow from Operations was 719 + 487 + 1101 + 499 = $2,806 Mil.
Accounts Receivable was $4,299 Mil.
Revenue was 5400 + 5587 + 6807 + 6312 = $24,106 Mil.
Gross Profit was 2166 + 2280 + 2889 + 2638 = $9,973 Mil.
Total Current Assets was $10,344 Mil.
Total Assets was $22,968 Mil.
Property, Plant and Equipment(Net PPE) was $3,570 Mil.
Depreciation, Depletion and Amortization(DDA) was $824 Mil.
Selling, General & Admin. Expense(SGA) was $5,600 Mil.
Total Current Liabilities was $8,770 Mil.
Long-Term Debt was $3,272 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)
=(3874 / 20958) / (4299 / 24106)
=0.18484588 / 0.17833734
=1.0365

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)
=(9973 / 24106) / (8485 / 20958)
=0.41371443 / 0.40485733
=1.0219

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 - (9913 + 3523) / 21764) / (1 - (10344 + 3570) / 22968)
=0.38265025 / 0.39420063
=0.9707

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
=20958 / 24106
=0.8694

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))
=(824 / (824 + 3570)) / (800 / (800 + 3523))
=0.18752845 / 0.18505667
=1.0134

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)
=(4905 / 20958) / (5600 / 24106)
=0.23403951 / 0.23230731
=1.0075

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)
=((4062 + 8182) / 21764) / ((3272 + 8770) / 22968)
=0.56258041 / 0.52429467
=1.073

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
=(1930 - -403 - 2806) / 21764
=-0.0217

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 -2.69 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 -0.029-0.039-0.0419-0.0689-0.0494-0.0158-0.0039-0.0306-0.0266-0.013
M-score -2.48-2.56-2.65-2.98-2.61-2.45-2.44-2.69-2.61-2.71

Emerson Electric Co Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.00591.01061.04951.00260.96040.94310.94670.99811.03651.0636
GMI 0.99040.98190.97450.97030.98390.99931.02051.031.02191.013
AQI 1.01291.03770.98060.93190.91830.93310.97320.95510.97070.9623
SGI 0.9950.99940.99460.99170.9810.94930.9090.87410.86940.8834
DEPI 1.051.04840.98810.99130.97590.98090.96840.99361.01341.0101
SGAI 1.02731.01721.01731.00441.00751.00870.99791.00881.00751.0032
LVGI 1.06231.02881.05121.13061.0941.1151.10151.10791.0731.0445
TATA -0.0361-0.0392-0.0234-0.0157-0.0286-0.0077-0.0179-0.0201-0.0217-0.0361
M-score -2.67-2.66-2.59-2.65-2.74-2.68-2.73-2.73-2.69-2.72
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