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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 * 1.0756||+||0.528 * 1.0342||+||0.404 * 1.7373||+||0.892 * 1.0705||+||0.115 * 0.9052|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9675||+||4.679 * -0.0045||-||0.327 * 1.1801|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,183 Mil.|
Revenue was 1705.105 + 1599.141 + 1491.645 + 1625.859 = $6,422 Mil.
Gross Profit was 513.256 + 484.714 + 464.586 + 478.072 = $1,941 Mil.
Total Current Assets was $2,318 Mil.
Total Assets was $2,926 Mil.
Property, Plant and Equipment(Net PPE) was $545 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $1,194 Mil.
Total Current Liabilities was $963 Mil.
Long-Term Debt was $0 Mil.
Net Income was 102.381 + 91.302 + 83.824 + 83.496 = $361 Mil.
Non Operating Income was 2.336 + 3.19 + -0.281 + 1.645 = $7 Mil.
Cash Flow from Operations was 86.691 + 44.886 + 173.857 + 61.953 = $367 Mil.
|Accounts Receivable was $1,028 Mil.
Revenue was 1537.966 + 1503.224 + 1413.208 + 1544.229 = $5,999 Mil.
Gross Profit was 484.902 + 471.872 + 448.007 + 470.01 = $1,875 Mil.
Total Current Assets was $2,498 Mil.
Total Assets was $3,099 Mil.
Property, Plant and Equipment(Net PPE) was $562 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $1,153 Mil.
Total Current Liabilities was $864 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)|
|=||(1183.167 / 6421.75)||/||(1027.572 / 5998.627)|
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)|
|=||(484.714 / 5998.627)||/||(513.256 / 6421.75)|
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 - (2317.972 + 545.366) / 2926.053)||/||(1 - (2498.211 + 562.125) / 3098.563)|
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))|
|=||(46.276 / (46.276 + 562.125))||/||(50.03 / (50.03 + 545.366))|
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)|
|=||(1194.264 / 6421.75)||/||(1153.094 / 5998.627)|
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 + 962.798) / 2926.053)||/||((0 + 863.979) / 3098.563)|
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|
|=||(361.003 - 6.89||-||367.387)||/||2926.053|
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 -2.12 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