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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.58 (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 -2.58 suggests that the company is not a manipulator.

EMR' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -2.31
Current: -2.58

-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 * 1.0059+0.528 * 0.9904+0.404 * 1.0129+0.892 * 0.995+0.115 * 1.05
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0273+4.679 * -0.0179-0.327 * 1.0623
=-2.58

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $4,563 Mil.
Revenue was 5812 + 5606 + 6812 + 6344 = $24,574 Mil.
Gross Profit was 2395 + 2236 + 2804 + 2568 = $10,003 Mil.
Total Current Assets was $10,203 Mil.
Total Assets was $24,346 Mil.
Property, Plant and Equipment(Net PPE) was $3,692 Mil.
Depreciation, Depletion and Amortization(DDA) was $827 Mil.
Selling, General & Admin. Expense(SGA) was $5,666 Mil.
Total Current Liabilities was $7,832 Mil.
Long-Term Debt was $3,836 Mil.
Net Income was 547 + 462 + 795 + 194 = $1,998 Mil.
Non Operating Income was -137 + -95 + -1142 + 107 = $-1,267 Mil.
Cash Flow from Operations was 575 + 691 + 1503 + 933 = $3,702 Mil.
Accounts Receivable was $4,559 Mil.
Revenue was 5960 + 5553 + 6700 + 6484 = $24,697 Mil.
Gross Profit was 2373 + 2207 + 2749 + 2628 = $9,957 Mil.
Total Current Assets was $10,189 Mil.
Total Assets was $23,724 Mil.
Property, Plant and Equipment(Net PPE) was $3,481 Mil.
Depreciation, Depletion and Amortization(DDA) was $828 Mil.
Selling, General & Admin. Expense(SGA) was $5,543 Mil.
Total Current Liabilities was $6,644 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)
=(4563 / 24574) / (4559 / 24697)
=0.18568406 / 0.18459732
=1.0059

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)
=(2236 / 24697) / (2395 / 24574)
=0.40316638 / 0.40705624
=0.9904

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 - (10203 + 3692) / 24346) / (1 - (10189 + 3481) / 23724)
=0.4292697 / 0.42379025
=1.0129

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
=24574 / 24697
=0.995

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))
=(828 / (828 + 3481)) / (827 / (827 + 3692))
=0.19215595 / 0.18300509
=1.05

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)
=(5666 / 24574) / (5543 / 24697)
=0.23056889 / 0.22444022
=1.0273

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)
=((3836 + 7832) / 24346) / ((4059 + 6644) / 23724)
=0.47925737 / 0.45114652
=1.0623

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
=(1998 - -1267 - 3702) / 24346
=-0.0179

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 -2.58 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.92550.96081.0041.09821.09751.02841.01440.95480.96951.0059
GMI 1.00681.00470.9980.98610.97870.97720.98290.99180.99650.9904
AQI 0.9520.95020.94460.92080.91670.9180.90430.95671.01481.0129
SGI 1.10351.06241.03141.00781.02751.02641.01241.01051.00270.995
DEPI 1.02641.04611.03461.06031.04751.01731.02941.02621.03451.05
SGAI 0.97460.99820.98581.01230.99230.99731.02651.02821.03781.0273
LVGI 1.0291.03741.03961.0141.00210.9951.01831.03091.00341.0623
TATA -0.0216-0.0133-0.01430.01250.0030.0013-0.0279-0.0188-0.0207-0.0179
M-score -2.58-2.55-2.55-2.36-2.39-2.47-2.64-2.63-2.60-2.58
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