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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.
During the past 13 years, the highest Beneish M-Score of Expeditors International of Washington Inc was -1.75. The lowest was -6.32. And the median was -2.50.
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 Expeditors International of Washington Inc 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 * 1.0664||+||0.528 * 1.026||+||0.404 * 1.8079||+||0.892 * 1.0797||+||0.115 * 0.9378|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9596||+||4.679 * -0.0081||-||0.327 * 1.179|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,236 Mil.|
Revenue was 1768.83 + 1705.105 + 1599.141 + 1491.645 = $6,565 Mil.
Gross Profit was 518.871 + 513.256 + 484.714 + 464.586 = $1,981 Mil.
Total Current Assets was $2,289 Mil.
Total Assets was $2,891 Mil.
Property, Plant and Equipment(Net PPE) was $538 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $1,206 Mil.
Total Current Liabilities was $984 Mil.
Long-Term Debt was $0 Mil.
Net Income was 99.381 + 102.381 + 91.302 + 83.824 = $377 Mil.
Non Operating Income was 0.223 + 2.336 + 3.19 + -0.281 = $5 Mil.
Cash Flow from Operations was 89.532 + 86.691 + 44.886 + 173.857 = $395 Mil.
|Accounts Receivable was $1,074 Mil.
Revenue was 1625.859 + 1537.966 + 1503.224 + 1413.208 = $6,080 Mil.
Gross Profit was 478.072 + 484.902 + 471.872 + 448.007 = $1,883 Mil.
Total Current Assets was $2,415 Mil.
Total Assets was $3,015 Mil.
Property, Plant and Equipment(Net PPE) was $563 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $1,164 Mil.
Total Current Liabilities was $870 Mil.
Long-Term Debt was $0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1236.042 / 6564.721)||/||(1073.5 / 6080.257)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(513.256 / 6080.257)||/||(518.871 / 6564.721)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2289.25 + 538.415) / 2890.905)||/||(1 - (2415.269 + 563.064) / 3014.812)|
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.
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))|
|=||(48.071 / (48.071 + 563.064))||/||(49.292 / (49.292 + 538.415))|
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)|
|=||(1206.264 / 6564.721)||/||(1164.281 / 6080.257)|
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)|
|=||((0 + 983.783) / 2890.905)||/||((0 + 870.2) / 3014.812)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(376.888 - 5.468||-||394.966)||/||2890.905|
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.
Expeditors International of Washington Inc has a M-score of -2.10 signals that the company is likely to be a manipulator.
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
Expeditors International of Washington Inc Annual Data
Expeditors International of Washington Inc Quarterly Data