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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 Flowers Foods Inc was -2.22. The lowest was -3.08. And the median was -2.74.
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 Flowers Foods 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 * 0.9249||+||0.528 * 0.9832||+||0.404 * 1.0316||+||0.892 * 1.0044||+||0.115 * 0.8731|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0154||+||4.679 * -0.0574||-||0.327 * 0.8897|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $236 Mil.|
Revenue was 862.475 + 849.36 + 877.378 + 1159.76 = $3,749 Mil.
Gross Profit was 408.716 + 406.382 + 419.359 + 563.883 = $1,798 Mil.
Total Current Assets was $461 Mil.
Total Assets was $2,409 Mil.
Property, Plant and Equipment(Net PPE) was $807 Mil.
Depreciation, Depletion and Amortization(DDA) was $129 Mil.
Selling, General & Admin. Expense(SGA) was $1,384 Mil.
Total Current Liabilities was $316 Mil.
Long-Term Debt was $729 Mil.
Net Income was 28.01 + 44.599 + 42.064 + 61.066 = $176 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 93.728 + 47.331 + 51.09 + 121.821 = $314 Mil.
|Accounts Receivable was $254 Mil.
Revenue was 825.161 + 878.492 + 898.153 + 1130.81 = $3,733 Mil.
Gross Profit was 377.65 + 410.694 + 426.539 + 545.512 = $1,760 Mil.
Total Current Assets was $487 Mil.
Total Assets was $2,504 Mil.
Property, Plant and Equipment(Net PPE) was $867 Mil.
Depreciation, Depletion and Amortization(DDA) was $118 Mil.
Selling, General & Admin. Expense(SGA) was $1,357 Mil.
Total Current Liabilities was $328 Mil.
Long-Term Debt was $892 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)|
|=||(235.911 / 3748.973)||/||(253.967 / 3732.616)|
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)|
|=||(406.382 / 3732.616)||/||(408.716 / 3748.973)|
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 - (460.563 + 807.458) / 2408.974)||/||(1 - (487.405 + 867.004) / 2504.014)|
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))|
|=||(118.491 / (118.491 + 867.004))||/||(128.961 / (128.961 + 807.458))|
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)|
|=||(1383.676 / 3748.973)||/||(1356.742 / 3732.616)|
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)|
|=||((728.94 + 315.553) / 2408.974)||/||((892.478 + 327.782) / 2504.014)|
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|
|=||(175.739 - 0||-||313.97)||/||2408.974|
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.
Flowers Foods Inc has a M-score of -2.79 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
Flowers Foods Inc Annual Data
Flowers Foods Inc Quarterly Data