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Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-2.68 (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 -2.68 suggests that the company is not a manipulator.

EMR' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -2.31
Current: -2.68

-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 * 1.0026+0.528 * 0.9703+0.404 * 0.9319+0.892 * 0.9917+0.115 * 0.9913
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0044+4.679 * -0.0234-0.327 * 1.1306
=-2.68

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $4,404 Mil.
Revenue was 5587 + 6807 + 6312 + 5812 = $24,518 Mil.
Gross Profit was 2280 + 2889 + 2638 + 2395 = $10,202 Mil.
Total Current Assets was $10,483 Mil.
Total Assets was $23,724 Mil.
Property, Plant and Equipment(Net PPE) was $3,631 Mil.
Depreciation, Depletion and Amortization(DDA) was $829 Mil.
Selling, General & Admin. Expense(SGA) was $5,676 Mil.
Total Current Liabilities was $8,877 Mil.
Long-Term Debt was $3,289 Mil.
Net Income was 525 + 410 + 728 + 547 = $2,210 Mil.
Non Operating Income was 0 + -573 + -96 + -137 = $-806 Mil.
Cash Flow from Operations was 571 + 1408 + 1018 + 575 = $3,572 Mil.
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.



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)
=(4404 / 24518) / (4429 / 24722)
=0.17962313 / 0.17915217
=1.0026

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)
=(2889 / 24722) / (2280 / 24518)
=0.40372947 / 0.41610246
=0.9703

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 - (10483 + 3631) / 23724) / (1 - (9999 + 3639) / 24124)
=0.40507503 / 0.43467087
=0.9319

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
=24518 / 24722
=0.9917

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))
=(822 / (822 + 3639)) / (829 / (829 + 3631))
=0.18426362 / 0.18587444
=0.9913

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)
=(5676 / 24518) / (5698 / 24722)
=0.23150339 / 0.23048297
=1.0044

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)
=((3289 + 8877) / 23724) / ((3834 + 7108) / 24124)
=0.51281403 / 0.45357321
=1.1306

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
=(2210 - -806 - 3572) / 23724
=-0.0234

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 -2.68 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 1.00211.00081.02220.96710.96821.0520.98031.09820.95481.0495
GMI 0.99760.9890.99130.98920.97960.95031.0030.98610.99180.9745
AQI 1.00111.01440.9560.93741.11761.12470.94760.92080.9381.0009
SGI 1.10821.14041.12151.12090.81031.04661.15131.00781.01050.9946
DEPI 1.01120.99390.98820.95670.97550.86480.98731.06031.07190.9461
SGAI 0.98870.99420.99951.00541.12640.97920.96071.01231.02821.0173
LVGI 1.02390.97330.99521.03520.96581.00830.98981.0141.03091.0512
TATA -0.0327-0.029-0.039-0.0419-0.0689-0.0494-0.0166-0.0039-0.0306-0.0266
M-score -2.54-2.48-2.56-2.65-2.98-2.61-2.45-2.44-2.69-2.60

Emerson Electric Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.09821.09751.02841.01440.95480.96951.00591.01061.04951.0026
GMI 0.98610.97870.97720.98290.99180.99650.99040.98190.97450.9703
AQI 0.92080.91670.9180.90430.9381.01481.01291.03771.00090.9319
SGI 1.00781.02751.02641.01241.01051.00270.9950.99940.99460.9917
DEPI 1.06031.04751.01731.02941.07191.03451.051.04840.94610.9913
SGAI 1.01230.99230.99731.02651.02821.03781.02731.01721.01731.0044
LVGI 1.0141.00210.9951.01831.03091.00341.06231.02881.05121.1306
TATA 0.01250.0030.00130.0002-0.0306-0.0367-0.0338-0.033-0.0306-0.0234
M-score -2.36-2.39-2.47-2.51-2.69-2.68-2.66-2.63-2.62-2.68
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