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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 -2.20. The lowest was -3.08. And the median was -2.70.
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 * 1.1342||+||0.528 * 0.9984||+||0.404 * 1.1289||+||0.892 * 1.0079||+||0.115 * 0.9764|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9906||+||4.679 * -0.0468||-||0.327 * 1.0693|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $270 Mil.|
Revenue was 858.363 + 885.302 + 888.795 + 1146.045 = $3,779 Mil.
Gross Profit was 402.424 + 421.257 + 431.542 + 560.129 = $1,815 Mil.
Total Current Assets was $538 Mil.
Total Assets was $2,885 Mil.
Property, Plant and Equipment(Net PPE) was $805 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $1,382 Mil.
Total Current Liabilities was $404 Mil.
Long-Term Debt was $934 Mil.
Net Income was 32.246 + 43.796 + 51.76 + 61.389 = $189 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 43.691 + 64.608 + 97.511 + 118.423 = $324 Mil.
|Accounts Receivable was $236 Mil.
Revenue was 877.333 + 844.932 + 872.791 + 1153.917 = $3,749 Mil.
Gross Profit was 423.574 + 401.954 + 414.772 + 558.04 = $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.
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)|
|=||(269.683 / 3778.505)||/||(235.911 / 3748.973)|
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)|
|=||(421.257 / 3748.973)||/||(402.424 / 3778.505)|
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 - (537.515 + 804.968) / 2885.168)||/||(1 - (460.563 + 807.458) / 2408.974)|
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))|
|=||(128.961 / (128.961 + 807.458))||/||(132.175 / (132.175 + 804.968))|
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)|
|=||(1381.527 / 3778.505)||/||(1383.676 / 3748.973)|
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)|
|=||((933.932 + 403.738) / 2885.168)||/||((728.94 + 315.553) / 2408.974)|
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|
|=||(189.191 - 0||-||324.233)||/||2885.168|
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 -2.54 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