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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 0.04. The lowest was -6.32. And the median was -2.54.
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 * 0.9487||+||0.528 * 0.9898||+||0.404 * 0.9716||+||0.892 * 1.0941||+||0.115 * 1.013|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9737||+||4.679 * -0.0247||-||0.327 * 1.0318|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,194 Mil.|
Revenue was 1691.553 + 1677.526 + 1768.83 + 1705.105 = $6,843 Mil.
Gross Profit was 552.141 + 529.486 + 518.871 + 513.256 = $2,114 Mil.
Total Current Assets was $2,335 Mil.
Total Assets was $2,932 Mil.
Property, Plant and Equipment(Net PPE) was $536 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $1,258 Mil.
Total Current Liabilities was $994 Mil.
Long-Term Debt was $0 Mil.
Net Income was 117.76 + 106.704 + 99.381 + 102.381 = $426 Mil.
Non Operating Income was 3.804 + 0.034 + 0.223 + 2.336 = $6 Mil.
Cash Flow from Operations was 181.728 + 134.394 + 89.532 + 86.691 = $492 Mil.
|Accounts Receivable was $1,151 Mil.
Revenue was 1599.141 + 1491.645 + 1625.859 + 1537.966 = $6,255 Mil.
Gross Profit was 484.714 + 464.586 + 478.072 + 484.902 = $1,912 Mil.
Total Current Assets was $2,310 Mil.
Total Assets was $2,930 Mil.
Property, Plant and Equipment(Net PPE) was $556 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $1,181 Mil.
Total Current Liabilities was $962 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)|
|=||(1194.18 / 6843.014)||/||(1150.531 / 6254.611)|
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)|
|=||(529.486 / 6254.611)||/||(552.141 / 6843.014)|
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 - (2334.755 + 536.121) / 2932.375)||/||(1 - (2310.47 + 556.228) / 2929.94)|
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))|
|=||(49.918 / (49.918 + 556.228))||/||(47.442 / (47.442 + 536.121))|
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)|
|=||(1257.606 / 6843.014)||/||(1180.541 / 6254.611)|
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 + 993.681) / 2932.375)||/||((0 + 962.231) / 2929.94)|
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|
|=||(426.226 - 6.397||-||492.345)||/||2932.375|
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 -2.58 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