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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 -2.79.
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 * 0.9702||+||0.528 * 0.9927||+||0.404 * 1.0182||+||0.892 * 1.0393||+||0.115 * 0.923|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0244||+||4.679 * -0.066||-||0.327 * 1.0056|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $272 Mil.|
Revenue was 868.717 + 918.791 + 935.025 + 1204.352 = $3,927 Mil.
Gross Profit was 418.255 + 442.031 + 457.07 + 583.162 = $1,901 Mil.
Total Current Assets was $477 Mil.
Total Assets was $2,761 Mil.
Property, Plant and Equipment(Net PPE) was $781 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $1,471 Mil.
Total Current Liabilities was $341 Mil.
Long-Term Debt was $947 Mil.
Net Income was 13.042 + 40.216 + 51.155 + 59.363 = $164 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 61.035 + 91.152 + 73.15 + 120.707 = $346 Mil.
|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.
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)|
|=||(271.913 / 3926.885)||/||(269.683 / 3778.505)|
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)|
|=||(1815.352 / 3778.505)||/||(1900.518 / 3926.885)|
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 - (476.842 + 781.026) / 2761.068)||/||(1 - (537.515 + 804.968) / 2885.168)|
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))|
|=||(132.175 / (132.175 + 804.968))||/||(140.869 / (140.869 + 781.026))|
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)|
|=||(1470.882 / 3926.885)||/||(1381.527 / 3778.505)|
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)|
|=||((946.667 + 340.624) / 2761.068)||/||((933.932 + 403.738) / 2885.168)|
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|
|=||(163.776 - 0||-||346.044)||/||2761.068|
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