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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: -2.31
Current: -2.6

-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 -2.56.


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 * 0.9695+0.528 * 0.9965+0.404 * 1.0148+0.892 * 1.0027+0.115 * 1.0345
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0378+4.679 * -0.0207-0.327 * 1.0034
=-2.60

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $4,429 Mil.
Revenue was 5606 + 6812 + 6344 + 5960 = $24,722 Mil.
Gross Profit was 2236 + 2804 + 2568 + 2373 = $9,981 Mil.
Total Current Assets was $9,999 Mil.
Total Assets was $24,124 Mil.
Property, Plant and Equipment(Net PPE) was $3,639 Mil.
Depreciation, Depletion and Amortization(DDA) was $822 Mil.
Selling, General & Admin. Expense(SGA) was $5,698 Mil.
Total Current Liabilities was $7,108 Mil.
Long-Term Debt was $3,834 Mil.
Net Income was 462 + 795 + 194 + 561 = $2,012 Mil.
Non Operating Income was -95 + -1142 + 107 + -59 = $-1,189 Mil.
Cash Flow from Operations was 691 + 1503 + 995 + 512 = $3,701 Mil.
Accounts Receivable was $4,556 Mil.
Revenue was 5553 + 6700 + 6484 + 5919 = $24,656 Mil.
Gross Profit was 2207 + 2749 + 2628 + 2336 = $9,920 Mil.
Total Current Assets was $10,086 Mil.
Total Assets was $23,771 Mil.
Property, Plant and Equipment(Net PPE) was $3,503 Mil.
Depreciation, Depletion and Amortization(DDA) was $825 Mil.
Selling, General & Admin. Expense(SGA) was $5,476 Mil.
Total Current Liabilities was $7,203 Mil.
Long-Term Debt was $3,542 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)
=(4429 / 24722) / (4556 / 24656)
=0.17915217 / 0.18478261
=0.9695

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)
=(2804 / 24656) / (2236 / 24722)
=0.40233615 / 0.40372947
=0.9965

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 - (9999 + 3639) / 24124) / (1 - (10086 + 3503) / 23771)
=0.43467087 / 0.42833705
=1.0148

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
=24722 / 24656
=1.0027

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))
=(825 / (825 + 3503)) / (822 / (822 + 3639))
=0.19061922 / 0.18426362
=1.0345

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)
=(5698 / 24722) / (5476 / 24656)
=0.23048297 / 0.22209604
=1.0378

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)
=((3834 + 7108) / 24124) / ((3542 + 7203) / 23771)
=0.45357321 / 0.45202137
=1.0034

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
=(2012 - -1189 - 3701) / 24124
=-0.0207

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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.9891.00211.00081.02220.96710.96821.0520.98031.09820.9548
GMI 0.98450.99760.9890.99130.98920.97960.95031.0030.98610.9918
AQI 0.96671.00111.01440.9560.93741.11761.12470.94760.92080.9567
SGI 1.11871.10821.14041.12151.12090.81031.04661.15131.00781.0105
DEPI 0.95821.01120.99390.98820.95670.97550.86480.98731.06031.0262
SGAI 0.99930.98870.99420.99951.00541.12640.97920.96071.01231.0282
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 -2.62-2.54-2.48-2.56-2.65-2.98-2.61-2.45-2.44-2.69

Emerson Electric Co. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.98030.92550.96081.0041.09821.09751.02841.01440.95480.9695
GMI 1.0031.00681.00470.9980.98610.97870.97720.98290.99180.9965
AQI 0.94760.9520.95020.94460.92080.91670.9180.90430.95671.0148
SGI 1.15131.10351.06241.03141.00781.02751.02641.01241.01051.0027
DEPI 0.98731.02641.04611.03461.06031.04751.01731.02941.02621.0345
SGAI 0.96070.97460.99820.98581.01230.99230.99731.02651.02821.0378
LVGI 0.98981.0291.03741.03961.0141.00210.9951.01831.03091.0034
TATA -0.0166-0.0216-0.0133-0.01430.01250.0030.0039-0.0279-0.0188-0.0207
M-score -2.45-2.58-2.55-2.55-2.36-2.39-2.45-2.64-2.63-2.60
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