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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 FMC Corporation was -2.03. The lowest was -3.32. And the median was -2.52.
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 FMC Corporation 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 * 1.1969||+||0.528 * 1.0667||+||0.404 * 0.9016||+||0.892 * 1.1138||+||0.115 * 1.0147|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9457||+||4.679 * 0.0149||-||0.327 * 0.9572|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,573 Mil.|
Revenue was 1015.9 + 987.8 + 941.8 + 1130.7 = $4,076 Mil.
Gross Profit was 323.7 + 357.6 + 328.5 + 354.9 = $1,365 Mil.
Total Current Assets was $2,857 Mil.
Total Assets was $5,251 Mil.
Property, Plant and Equipment(Net PPE) was $1,283 Mil.
Depreciation, Depletion and Amortization(DDA) was $134 Mil.
Selling, General & Admin. Expense(SGA) was $534 Mil.
Total Current Liabilities was $1,742 Mil.
Long-Term Debt was $1,152 Mil.
Net Income was 56.3 + 109.1 + 65.6 + 27.1 = $258 Mil.
Non Operating Income was -0.4 + 0.2 + 0 + -1.4 = $-2 Mil.
Cash Flow from Operations was 86.6 + 211.9 + -96.8 + -20.5 = $181 Mil.
|Accounts Receivable was $1,180 Mil.
Revenue was 957.4 + 876 + 910.7 + 915.5 = $3,660 Mil.
Gross Profit was 304.4 + 327.5 + 353.6 + 321.5 = $1,307 Mil.
Total Current Assets was $2,611 Mil.
Total Assets was $4,931 Mil.
Property, Plant and Equipment(Net PPE) was $1,164 Mil.
Depreciation, Depletion and Amortization(DDA) was $123 Mil.
Selling, General & Admin. Expense(SGA) was $507 Mil.
Total Current Liabilities was $2,067 Mil.
Long-Term Debt was $772 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)|
|=||(1572.6 / 4076.2)||/||(1179.6 / 3659.6)|
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)|
|=||(357.6 / 3659.6)||/||(323.7 / 4076.2)|
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 - (2857.3 + 1283.3) / 5251.1)||/||(1 - (2610.7 + 1163.5) / 4930.8)|
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))|
|=||(123 / (123 + 1163.5))||/||(133.5 / (133.5 + 1283.3))|
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)|
|=||(533.5 / 4076.2)||/||(506.5 / 3659.6)|
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)|
|=||((1151.9 + 1741.5) / 5251.1)||/||((771.8 + 2066.5) / 4930.8)|
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|
|=||(258.1 - -1.6||-||181.2)||/||5251.1|
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.
FMC Corporation has a M-score of -2.11 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
FMC Corporation Annual Data
FMC Corporation Quarterly Data