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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.61 (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 -2.61 suggests that the company is not a manipulator.

EMR' s 10-Year Beneish M-Score Range
Min: -516699.35   Max: 614520.16
Current: -2.61

-516699.35
614520.16

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was 614520.16. The lowest was -516699.35. 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 * 1.0106+0.528 * 0.9819+0.404 * 1.0377+0.892 * 0.9994+0.115 * 1.0484
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0172+4.679 * -0.0293-0.327 * 1.0288
=-2.61

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $4,772 Mil.
Revenue was 6312 + 5812 + 5606 + 6812 = $24,542 Mil.
Gross Profit was 2638 + 2395 + 2236 + 2804 = $10,073 Mil.
Total Current Assets was $10,813 Mil.
Total Assets was $25,115 Mil.
Property, Plant and Equipment(Net PPE) was $3,737 Mil.
Depreciation, Depletion and Amortization(DDA) was $830 Mil.
Selling, General & Admin. Expense(SGA) was $5,694 Mil.
Total Current Liabilities was $8,533 Mil.
Long-Term Debt was $3,565 Mil.
Net Income was 728 + 547 + 462 + 795 = $2,532 Mil.
Non Operating Income was -96 + -137 + -95 + -135 = $-463 Mil.
Cash Flow from Operations was 1018 + 575 + 691 + 1446 = $3,730 Mil.
Accounts Receivable was $4,725 Mil.
Revenue was 6344 + 5960 + 5553 + 6700 = $24,557 Mil.
Gross Profit was 2568 + 2373 + 2207 + 2749 = $9,897 Mil.
Total Current Assets was $10,506 Mil.
Total Assets was $23,513 Mil.
Property, Plant and Equipment(Net PPE) was $3,475 Mil.
Depreciation, Depletion and Amortization(DDA) was $818 Mil.
Selling, General & Admin. Expense(SGA) was $5,601 Mil.
Total Current Liabilities was $6,950 Mil.
Long-Term Debt was $4,059 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)
=(4772 / 24542) / (4725 / 24557)
=0.19444218 / 0.1924095
=1.0106

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)
=(2395 / 24557) / (2638 / 24542)
=0.40302154 / 0.41043925
=0.9819

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 - (10813 + 3737) / 25115) / (1 - (10506 + 3475) / 23513)
=0.42066494 / 0.40539276
=1.0377

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
=24542 / 24557
=0.9994

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))
=(818 / (818 + 3475)) / (830 / (830 + 3737))
=0.19054274 / 0.18173856
=1.0484

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)
=(5694 / 24542) / (5601 / 24557)
=0.23201043 / 0.22808161
=1.0172

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)
=((3565 + 8533) / 25115) / ((4059 + 6950) / 23513)
=0.48170416 / 0.46820908
=1.0288

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
=(2532 - -463 - 3730) / 25115
=-0.0293

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 -2.61 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.9891.00211.00081.02220.96710.93051.09450.98031.09820.9548
GMI 0.98450.99760.9890.99130.98921.00080.93021.0030.98610.9918
AQI 0.96671.00111.01440.9560.93741.11761.12470.94760.92080.9567
SGI 1.11871.10821.14041.12151.12090.84311.00591.15131.00781.0105
DEPI 0.95821.01120.99390.98820.95670.97550.86480.98731.06031.0262
SGAI 0.99930.98870.99420.99951.00541.0441.05660.96071.01231.0282
LVGI 0.97091.02390.97330.99521.03520.96581.00830.98981.0141.0309
TATA -0.0463-0.0327-0.029-0.039-0.0419-0.0689-0.0494-0.0166-0.0039-0.0306
M-score -2.62-2.54-2.48-2.56-2.65-2.96-2.63-2.45-2.44-2.69

Emerson Electric Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.96081.0041.09821.09751.02841.01440.95480.96951.00591.0106
GMI 1.00470.9980.98610.97870.97720.98290.99180.99650.99040.9819
AQI 0.95020.94460.92080.91670.9180.90430.95671.01481.01291.0377
SGI 1.06241.03141.00781.02751.02641.01241.01051.00270.9950.9994
DEPI 1.04611.03461.06031.04751.01731.02941.02621.03451.051.0484
SGAI 0.99820.98581.01230.99230.99731.02651.02821.03781.02731.0172
LVGI 1.03741.03961.0141.00210.9951.01831.03091.00341.06231.0288
TATA -0.0133-0.01430.01250.0030.00130.0002-0.0306-0.0327-0.0299-0.0293
M-score -2.55-2.55-2.36-2.39-2.47-2.51-2.69-2.66-2.64-2.61
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