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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 2.76. The lowest was -4.60. And the median was -2.59.
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 * 0.9324||+||0.528 * 0.9453||+||0.404 * 1.0507||+||0.892 * 1.0572||+||0.115 * 1.0447|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0147||+||4.679 * -0.0344||-||0.327 * 1.0269|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,166 Mil.|
Revenue was 1651.332 + 1691.553 + 1677.526 + 1768.83 = $6,789 Mil.
Gross Profit was 569.981 + 552.141 + 529.486 + 518.871 = $2,170 Mil.
Total Current Assets was $2,235 Mil.
Total Assets was $2,827 Mil.
Property, Plant and Equipment(Net PPE) was $528 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $1,281 Mil.
Total Current Liabilities was $955 Mil.
Long-Term Debt was $0 Mil.
Net Income was 118.31 + 117.76 + 106.704 + 99.381 = $442 Mil.
Non Operating Income was -3.085 + 3.804 + 0.034 + 0.223 = $1 Mil.
Cash Flow from Operations was 132.676 + 181.728 + 134.394 + 89.532 = $538 Mil.
|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.
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)|
|=||(1166.3 / 6789.241)||/||(1183.167 / 6421.75)|
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)|
|=||(552.141 / 6421.75)||/||(569.981 / 6789.241)|
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 - (2235.46 + 527.893) / 2827.018)||/||(1 - (2317.972 + 545.366) / 2926.053)|
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))|
|=||(50.03 / (50.03 + 545.366))||/||(46.176 / (46.176 + 527.893))|
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)|
|=||(1281.105 / 6789.241)||/||(1194.264 / 6421.75)|
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 + 955.202) / 2827.018)||/||((0 + 962.798) / 2926.053)|
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|
|=||(442.155 - 0.976||-||538.33)||/||2827.018|
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 -2.67 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