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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 Fluor Corp was -1.66. The lowest was -3.22. And the median was -2.50.
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 Fluor Corp 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 * 1.4575||+||0.528 * 1.4545||+||0.404 * 1.4349||+||0.892 * 0.9593||+||0.115 * 0.9886|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0542||+||4.679 * -0.0356||-||0.327 * 1.1494|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,670 Mil.|
Revenue was 4766.864 + 4856.117 + 4423.889 + 4370.681 = $18,418 Mil.
Gross Profit was 37.227 + 248.249 + 255.822 + 252.462 = $794 Mil.
Total Current Assets was $5,742 Mil.
Total Assets was $9,317 Mil.
Property, Plant and Equipment(Net PPE) was $1,042 Mil.
Depreciation, Depletion and Amortization(DDA) was $216 Mil.
Selling, General & Admin. Expense(SGA) was $179 Mil.
Total Current Liabilities was $3,876 Mil.
Long-Term Debt was $1,556 Mil.
Net Income was 4.804 + 101.813 + 104.323 + -51.357 = $160 Mil.
Non Operating Income was 0 + 0 + 0 + -239.896 = $-240 Mil.
Cash Flow from Operations was 361.94 + -24.111 + 114.655 + 278.709 = $731 Mil.
|Accounts Receivable was $1,195 Mil.
Revenue was 4384.612 + 4810.106 + 4548.649 + 5455.196 = $19,199 Mil.
Gross Profit was 250.793 + 293.981 + 297.46 + 361.268 = $1,204 Mil.
Total Current Assets was $5,230 Mil.
Total Assets was $7,599 Mil.
Property, Plant and Equipment(Net PPE) was $930 Mil.
Depreciation, Depletion and Amortization(DDA) was $190 Mil.
Selling, General & Admin. Expense(SGA) was $177 Mil.
Total Current Liabilities was $2,862 Mil.
Long-Term Debt was $993 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)|
|=||(1670.172 / 18417.551)||/||(1194.505 / 19198.563)|
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)|
|=||(1203.502 / 19198.563)||/||(793.76 / 18417.551)|
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 - (5741.578 + 1042.354) / 9316.606)||/||(1 - (5229.758 + 929.888) / 7599.361)|
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))|
|=||(189.729 / (189.729 + 929.888))||/||(215.648 / (215.648 + 1042.354))|
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)|
|=||(179.166 / 18417.551)||/||(177.156 / 19198.563)|
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)|
|=||((1555.522 + 3876.197) / 9316.606)||/||((992.689 + 2861.801) / 7599.361)|
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|
|=||(159.583 - -239.896||-||731.193)||/||9316.606|
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.
Fluor Corp has a M-score of -1.91 signals that the company is likely to 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
Fluor Corp Annual Data
Fluor Corp Quarterly Data