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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 -1.65. The lowest was -4.60. And the median was -2.53.
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 * 1.161||+||0.528 * 0.9317||+||0.404 * 0.5103||+||0.892 * 0.9216||+||0.115 * 1.005|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1021||+||4.679 * -0.0371||-||0.327 * 0.9924|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,190 Mil.|
Revenue was 1642.007 + 1562.394 + 1475.164 + 1418.472 = $6,098 Mil.
Gross Profit was 548.591 + 545.259 + 553.117 + 517.069 = $2,164 Mil.
Total Current Assets was $2,219 Mil.
Total Assets was $2,791 Mil.
Property, Plant and Equipment(Net PPE) was $537 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $1,308 Mil.
Total Current Liabilities was $930 Mil.
Long-Term Debt was $0 Mil.
Net Income was 110.59 + 107.581 + 116.052 + 96.584 = $431 Mil.
Non Operating Income was 1.706 + 0.925 + 1.603 + 0.879 = $5 Mil.
Cash Flow from Operations was 72.408 + 115.686 + 105.052 + 235.953 = $529 Mil.
|Accounts Receivable was $1,112 Mil.
Revenue was 1596.221 + 1651.332 + 1691.553 + 1677.526 = $6,617 Mil.
Gross Profit was 536.169 + 569.981 + 552.141 + 529.486 = $2,188 Mil.
Total Current Assets was $1,977 Mil.
Total Assets was $2,566 Mil.
Property, Plant and Equipment(Net PPE) was $525 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $1,288 Mil.
Total Current Liabilities was $861 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)|
|=||(1190.13 / 6098.037)||/||(1112.26 / 6616.632)|
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)|
|=||(2187.777 / 6616.632)||/||(2164.036 / 6098.037)|
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 - (2218.579 + 536.572) / 2790.871)||/||(1 - (1976.509 + 524.724) / 2565.577)|
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))|
|=||(46.012 / (46.012 + 524.724))||/||(46.796 / (46.796 + 536.572))|
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)|
|=||(1308.21 / 6098.037)||/||(1287.971 / 6616.632)|
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 + 929.931) / 2790.871)||/||((0 + 861.373) / 2565.577)|
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|
|=||(430.807 - 5.113||-||529.099)||/||2790.871|
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 -2.82 suggests that the company will not 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