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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.
Flowers Foods Inc has a M-score of -2.67 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Flowers Foods Inc was -2.08. The lowest was -3.61. And the median was -2.72.
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 * 0.9235||+||0.528 * 0.9948||+||0.404 * 1.0365||+||0.892 * 1.02||+||0.115 * 0.8541|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9981||+||4.679 * -0.034||-||0.327 * 0.9215|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $251 Mil.|
Revenue was 849.36 + 877.378 + 1159.76 + 843.55 = $3,730 Mil.
Gross Profit was 406.382 + 419.359 + 563.883 + 396.039 = $1,786 Mil.
Total Current Assets was $505 Mil.
Total Assets was $2,477 Mil.
Property, Plant and Equipment(Net PPE) was $822 Mil.
Depreciation, Depletion and Amortization(DDA) was $127 Mil.
Selling, General & Admin. Expense(SGA) was $1,363 Mil.
Total Current Liabilities was $336 Mil.
Long-Term Debt was $781 Mil.
Net Income was 44.599 + 42.064 + 61.066 + 38.52 = $186 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 47.331 + 51.09 + 121.821 + 50.224 = $270 Mil.
|Accounts Receivable was $267 Mil.
Revenue was 878.492 + 898.153 + 1130.81 + 749.442 = $3,657 Mil.
Gross Profit was 410.694 + 426.539 + 545.512 + 358.776 = $1,742 Mil.
Total Current Assets was $487 Mil.
Total Assets was $2,501 Mil.
Property, Plant and Equipment(Net PPE) was $894 Mil.
Depreciation, Depletion and Amortization(DDA) was $116 Mil.
Selling, General & Admin. Expense(SGA) was $1,339 Mil.
Total Current Liabilities was $321 Mil.
Long-Term Debt was $903 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)|
|=||(251.349 / 3730.048)||/||(266.839 / 3656.897)|
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)|
|=||(419.359 / 3656.897)||/||(406.382 / 3730.048)|
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 - (505.062 + 821.954) / 2477.204)||/||(1 - (487.178 + 893.708) / 2501.416)|
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))|
|=||(115.708 / (115.708 + 893.708))||/||(127.408 / (127.408 + 821.954))|
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)|
|=||(1362.703 / 3730.048)||/||(1338.565 / 3656.897)|
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)|
|=||((780.969 + 336.084) / 2477.204)||/||((903.451 + 320.56) / 2501.416)|
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|
|=||(186.249 - 0||-||270.466)||/||2477.204|
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 -2.67 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
Flowers Foods Inc Annual Data
Flowers Foods Inc Quarterly Data