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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 -2.09. The lowest was -3.61. And the median was -2.75.
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 * 0.9916||+||0.528 * 0.979||+||0.404 * 1.0011||+||0.892 * 1.0044||+||0.115 * 0.9364|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0143||+||4.679 * -0.0705||-||0.327 * 0.9079|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $261 Mil.|
Revenue was 888.795 + 1146.045 + 862.475 + 849.36 = $3,747 Mil.
Gross Profit was 431.542 + 560.129 + 408.716 + 406.382 = $1,807 Mil.
Total Current Assets was $516 Mil.
Total Assets was $2,428 Mil.
Property, Plant and Equipment(Net PPE) was $777 Mil.
Depreciation, Depletion and Amortization(DDA) was $130 Mil.
Selling, General & Admin. Expense(SGA) was $1,380 Mil.
Total Current Liabilities was $344 Mil.
Long-Term Debt was $659 Mil.
Net Income was 51.76 + 61.389 + 28.01 + 44.599 = $186 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 97.511 + 118.423 + 93.728 + 47.331 = $357 Mil.
|Accounts Receivable was $262 Mil.
Revenue was 872.791 + 1153.917 + 825.161 + 878.492 = $3,730 Mil.
Gross Profit was 414.772 + 558.04 + 377.65 + 410.694 = $1,761 Mil.
Total Current Assets was $501 Mil.
Total Assets was $2,484 Mil.
Property, Plant and Equipment(Net PPE) was $824 Mil.
Depreciation, Depletion and Amortization(DDA) was $128 Mil.
Selling, General & Admin. Expense(SGA) was $1,355 Mil.
Total Current Liabilities was $339 Mil.
Long-Term Debt was $792 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)|
|=||(260.864 / 3746.675)||/||(261.939 / 3730.361)|
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)|
|=||(560.129 / 3730.361)||/||(431.542 / 3746.675)|
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 - (516.332 + 777.473) / 2427.627)||/||(1 - (500.813 + 824.302) / 2484.087)|
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))|
|=||(127.758 / (127.758 + 824.302))||/||(130.047 / (130.047 + 777.473))|
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)|
|=||(1380.236 / 3746.675)||/||(1354.899 / 3730.361)|
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)|
|=||((659.094 + 344.304) / 2427.627)||/||((791.791 + 339.142) / 2484.087)|
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|
|=||(185.758 - 0||-||356.993)||/||2427.627|
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 -2.80 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