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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.
Fluor Corp has a M-score of -2.89 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Fluor Corp was -1.66. The lowest was -3.23. And the median was -2.43.
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 * 1.2483||+||0.528 * 0.5925||+||0.404 * 1.1218||+||0.892 * 0.8275||+||0.115 * 1.1575|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6922||+||4.679 * -0.0491||-||0.327 * 0.9674|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,400 Mil.|
Revenue was 5251.664 + 5384.636 + 6291.405 + 6684.216 = $23,612 Mil.
Gross Profit was 345.312 + 312.332 + 335.93 + 354.531 = $1,348 Mil.
Total Current Assets was $6,005 Mil.
Total Assets was $8,399 Mil.
Property, Plant and Equipment(Net PPE) was $985 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $205 Mil.
Total Current Liabilities was $3,571 Mil.
Long-Term Debt was $497 Mil.
Net Income was 77.79 + 149.074 + 166.795 + 173.046 = $567 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 239.015 + 186.714 + 76.256 + 477.118 = $979 Mil.
|Accounts Receivable was $1,356 Mil.
Revenue was 7190.328 + 7185.624 + 7022.722 + 7136.056 = $28,535 Mil.
Gross Profit was 332.856 + 341.874 + -15.642 + 306.275 = $965 Mil.
Total Current Assets was $6,187 Mil.
Total Assets was $8,368 Mil.
Property, Plant and Equipment(Net PPE) was $929 Mil.
Depreciation, Depletion and Amortization(DDA) was $218 Mil.
Selling, General & Admin. Expense(SGA) was $146 Mil.
Total Current Liabilities was $3,693 Mil.
Long-Term Debt was $496 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)|
|=||(1400.452 / 23611.921)||/||(1355.841 / 28534.73)|
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)|
|=||(312.332 / 28534.73)||/||(345.312 / 23611.921)|
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 - (6004.845 + 984.578) / 8398.951)||/||(1 - (6186.539 + 929.275) / 8367.597)|
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))|
|=||(217.778 / (217.778 + 929.275))||/||(193.181 / (193.181 + 984.578))|
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)|
|=||(205.112 / 23611.921)||/||(146.482 / 28534.73)|
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)|
|=||((496.825 + 3570.758) / 8398.951)||/||((496.384 + 3692.543) / 8367.597)|
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|
|=||(566.705 - 0||-||979.103)||/||8398.951|
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 -2.89 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
Fluor Corp Annual Data
Fluor Corp Quarterly Data