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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 Corp was -1.60. The lowest was -3.31. 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 FMC 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 * 1.149||+||0.528 * 1.1322||+||0.404 * 1.3465||+||0.892 * 1.0055||+||0.115 * 0.8939|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2443||+||4.679 * 0.1216||-||0.327 * 0.9635|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,851 Mil.|
Revenue was 899.3 + 830.7 + 887.1 + 659.4 = $3,277 Mil.
Gross Profit was 298.6 + 220.3 + 305.8 + 250.7 = $1,075 Mil.
Total Current Assets was $2,972 Mil.
Total Assets was $6,326 Mil.
Property, Plant and Equipment(Net PPE) was $1,016 Mil.
Depreciation, Depletion and Amortization(DDA) was $116 Mil.
Selling, General & Admin. Expense(SGA) was $738 Mil.
Total Current Liabilities was $1,453 Mil.
Long-Term Debt was $2,036 Mil.
Net Income was -204.1 + -2.4 + 742.3 + -46.8 = $489 Mil.
Non Operating Income was 117.6 + -40.4 + 0.1 + -0.1 = $77 Mil.
Cash Flow from Operations was -47.2 + -137.9 + 124.6 + -297.2 = $-358 Mil.
|Accounts Receivable was $1,603 Mil.
Revenue was 887.8 + 819.1 + 794.9 + 756.9 = $3,259 Mil.
Gross Profit was 318.3 + 283.5 + 316.1 + 293 = $1,211 Mil.
Total Current Assets was $2,934 Mil.
Total Assets was $5,326 Mil.
Property, Plant and Equipment(Net PPE) was $930 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $1,910 Mil.
Long-Term Debt was $1,139 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)|
|=||(1851.4 / 3276.5)||/||(1602.5 / 3258.7)|
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)|
|=||(220.3 / 3258.7)||/||(298.6 / 3276.5)|
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 - (2971.9 + 1016.4) / 6325.9)||/||(1 - (2934.4 + 930) / 5326)|
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))|
|=||(93.5 / (93.5 + 930))||/||(115.7 / (115.7 + 1016.4))|
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)|
|=||(737.9 / 3276.5)||/||(589.8 / 3258.7)|
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)|
|=||((2036.3 + 1453.3) / 6325.9)||/||((1138.9 + 1910.4) / 5326)|
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|
|=||(489 - 77.2||-||-357.7)||/||6325.9|
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 Corp has a M-score of -1.60 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 Corp Annual Data
FMC Corp Quarterly Data