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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 -1.52. 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 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 * 0.9303||+||0.528 * 1.1442||+||0.404 * 1.5594||+||0.892 * 1.1549||+||0.115 * 0.6202|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4032||+||4.679 * 0.1472||-||0.327 * 0.9862|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,690 Mil.|
Revenue was 830.7 + 887.1 + 659.4 + 1666.8 = $4,044 Mil.
Gross Profit was 220.3 + 305.8 + 250.7 + 482.4 = $1,259 Mil.
Total Current Assets was $3,238 Mil.
Total Assets was $6,447 Mil.
Property, Plant and Equipment(Net PPE) was $1,083 Mil.
Depreciation, Depletion and Amortization(DDA) was $153 Mil.
Selling, General & Admin. Expense(SGA) was $837 Mil.
Total Current Liabilities was $1,455 Mil.
Long-Term Debt was $2,049 Mil.
Net Income was -2.4 + 742.3 + -46.8 + 76.5 = $770 Mil.
Non Operating Income was -40.4 + 0.1 + -0.1 + -0.7 = $-41 Mil.
Cash Flow from Operations was -137.9 + 124.6 + -297.2 + 172 = $-139 Mil.
|Accounts Receivable was $1,573 Mil.
Revenue was 819.1 + 794.9 + 756.9 + 1130.7 = $3,502 Mil.
Gross Profit was 283.5 + 316.1 + 293 + 354.9 = $1,248 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 $106 Mil.
Selling, General & Admin. Expense(SGA) was $517 Mil.
Total Current Liabilities was $1,742 Mil.
Long-Term Debt was $1,152 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)|
|=||(1689.6 / 4044)||/||(1572.6 / 3501.6)|
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)|
|=||(305.8 / 3501.6)||/||(220.3 / 4044)|
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 - (3238.1 + 1082.8) / 6447)||/||(1 - (2857.3 + 1283.3) / 5251.1)|
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))|
|=||(106.4 / (106.4 + 1283.3))||/||(152.5 / (152.5 + 1082.8))|
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)|
|=||(837.2 / 4044)||/||(516.6 / 3501.6)|
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)|
|=||((2048.5 + 1455) / 6447)||/||((1151.9 + 1741.5) / 5251.1)|
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|
|=||(769.6 - -41.1||-||-138.5)||/||6447|
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 -1.52 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