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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-3.09 (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 -2.75 suggests that the company is not a manipulator.

EMR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: -2.44
Current: -3.09

-3.09
-2.44

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was -2.44. The lowest was -3.09. And the median was -2.61.


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 * 1.053+0.528 * 1.0002+0.404 * 0.9871+0.892 * 0.8937+0.115 * 1.0079
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0377+4.679 * -0.0438-0.327 * 1.0143
=-2.75

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,701 Mil.
Revenue was $14,522 Mil.
Gross Profit was $6,262 Mil.
Total Current Assets was $9,960 Mil.
Total Assets was $21,743 Mil.
Property, Plant and Equipment(Net PPE) was $2,931 Mil.
Depreciation, Depletion and Amortization(DDA) was $568 Mil.
Selling, General & Admin. Expense(SGA) was $3,464 Mil.
Total Current Liabilities was $8,008 Mil.
Long-Term Debt was $4,062 Mil.
Net Income was $1,635 Mil.
Non Operating Income was $-294 Mil.
Cash Flow from Operations was $2,881 Mil.
Accounts Receivable was $2,870 Mil.
Revenue was $16,249 Mil.
Gross Profit was $7,008 Mil.
Total Current Assets was $10,049 Mil.
Total Assets was $22,088 Mil.
Property, Plant and Equipment(Net PPE) was $2,929 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $3,735 Mil.
Total Current Liabilities was $7,800 Mil.
Long-Term Debt was $4,289 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)
=(2701 / 14522) / (2870 / 16249)
=0.18599366 / 0.17662625
=1.053

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)
=(7008 / 16249) / (6262 / 14522)
=0.43128808 / 0.43120782
=1.0002

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 - (9960 + 2931) / 21743) / (1 - (10049 + 2929) / 22088)
=0.40711953 / 0.41244114
=0.9871

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
=14522 / 16249
=0.8937

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))
=(573 / (573 + 2929)) / (568 / (568 + 2931))
=0.16362079 / 0.16233209
=1.0079

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)
=(3464 / 14522) / (3735 / 16249)
=0.23853464 / 0.2298603
=1.0377

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 + 8008) / 21743) / ((4289 + 7800) / 22088)
=0.55512119 / 0.54731076
=1.0143

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
=(1635 - -294 - 2881) / 21743
=-0.0438

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 -2.75 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 local exchange's currency.

Emerson Electric Co Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.02220.96710.96821.0520.98031.09820.95481.45220.62411.053
GMI 0.99130.98920.97960.95031.0030.98610.99180.92171.01491.0002
AQI 0.9560.93741.11761.12470.94760.92080.9380.98061.04880.9871
SGI 1.12151.12090.81031.04661.15131.00781.01050.71880.91630.8937
DEPI 0.98820.95670.97550.86480.98731.06031.07191.36150.79561.0079
SGAI 0.99951.00541.12640.97920.96071.01231.02821.02560.97891.0377
LVGI 0.99521.03520.96581.00830.98981.0141.03091.05121.10151.0143
TATA -0.039-0.0419-0.0689-0.0494-0.0158-0.0039-0.0306-0.0552-0.0239-0.0438
M-score -2.56-2.65-2.98-2.61-2.45-2.44-2.69-2.60-3.04-2.75
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