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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.72 (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 -2.72 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: -2.72

-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 * 1.0636+0.528 * 1.013+0.404 * 0.9623+0.892 * 0.8834+0.115 * 1.0101
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0032+4.679 * -0.0361-0.327 * 1.0445
=-2.72

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $4,014 Mil.
Revenue was 5126 + 4928 + 4713 + 5814 = $20,581 Mil.
Gross Profit was 2094 + 1994 + 1889 + 2368 = $8,345 Mil.
Total Current Assets was $10,220 Mil.
Total Assets was $22,082 Mil.
Property, Plant and Equipment(Net PPE) was $3,521 Mil.
Depreciation, Depletion and Amortization(DDA) was $791 Mil.
Selling, General & Admin. Expense(SGA) was $4,832 Mil.
Total Current Liabilities was $8,326 Mil.
Long-Term Debt was $4,062 Mil.
Net Income was 479 + 369 + 349 + 648 = $1,845 Mil.
Non Operating Income was -102 + -76 + -63 + -142 = $-383 Mil.
Cash Flow from Operations was 718 + 719 + 487 + 1101 = $3,025 Mil.
Accounts Receivable was $4,272 Mil.
Revenue was 5503 + 5400 + 5587 + 6807 = $23,297 Mil.
Gross Profit was 2234 + 2166 + 2280 + 2889 = $9,569 Mil.
Total Current Assets was $10,644 Mil.
Total Assets was $23,464 Mil.
Property, Plant and Equipment(Net PPE) was $3,610 Mil.
Depreciation, Depletion and Amortization(DDA) was $821 Mil.
Selling, General & Admin. Expense(SGA) was $5,452 Mil.
Total Current Liabilities was $8,312 Mil.
Long-Term Debt was $4,290 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)
=(4014 / 20581) / (4272 / 23297)
=0.19503425 / 0.18337125
=1.0636

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)
=(9569 / 23297) / (8345 / 20581)
=0.41073958 / 0.40547107
=1.013

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 - (10220 + 3521) / 22082) / (1 - (10644 + 3610) / 23464)
=0.37772847 / 0.3925162
=0.9623

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
=20581 / 23297
=0.8834

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))
=(821 / (821 + 3610)) / (791 / (791 + 3521))
=0.18528549 / 0.18344156
=1.0101

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)
=(4832 / 20581) / (5452 / 23297)
=0.23477965 / 0.23402155
=1.0032

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 + 8326) / 22082) / ((4290 + 8312) / 23464)
=0.56099991 / 0.53707808
=1.0445

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
=(1845 - -383 - 3025) / 22082
=-0.0361

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 -2.72 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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