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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 -3.23. And the median was -2.49.
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 * 1.3816||+||0.528 * 0.7816||+||0.404 * 0.943||+||0.892 * 0.81||+||0.115 * 1.0439|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2738||+||4.679 * 0.0014||-||0.327 * 1.098|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,256 Mil.|
Revenue was 4548.649 + 5455.196 + 5440.081 + 5251.664 = $20,696 Mil.
Gross Profit was 297.46 + 361.268 + 380.121 + 345.312 = $1,384 Mil.
Total Current Assets was $5,379 Mil.
Total Assets was $7,619 Mil.
Property, Plant and Equipment(Net PPE) was $966 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $186 Mil.
Total Current Liabilities was $2,820 Mil.
Long-Term Debt was $992 Mil.
Net Income was 144.079 + 214.543 + 69.502 + 77.79 = $506 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 39.282 + 235.225 + -18.38 + 239.015 = $495 Mil.
|Accounts Receivable was $1,123 Mil.
Revenue was 5384.636 + 6291.405 + 6684.216 + 7190.328 = $25,551 Mil.
Gross Profit was 312.332 + 335.93 + 354.531 + 332.856 = $1,336 Mil.
Total Current Assets was $5,615 Mil.
Total Assets was $7,992 Mil.
Property, Plant and Equipment(Net PPE) was $960 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $180 Mil.
Total Current Liabilities was $3,145 Mil.
Long-Term Debt was $497 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)|
|=||(1256.292 / 20695.59)||/||(1122.629 / 25550.585)|
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)|
|=||(361.268 / 25550.585)||/||(297.46 / 20695.59)|
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 - (5379.253 + 965.935) / 7619.196)||/||(1 - (5614.751 + 960.064) / 7991.937)|
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))|
|=||(200.874 / (200.874 + 960.064))||/||(191.905 / (191.905 + 965.935))|
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)|
|=||(186.048 / 20695.59)||/||(180.319 / 25550.585)|
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)|
|=||((992.231 + 2819.696) / 7619.196)||/||((496.715 + 3144.763) / 7991.937)|
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|
|=||(505.914 - 0||-||495.142)||/||7619.196|
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 -2.50 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