Switch to:
GuruFocus has detected 5 Warning Signs with FMC Corp $FMC.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
FMC Corp (NYSE:FMC)
Beneish M-Score
-2.60 (As of Today)

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.

FMC Corp has a M-score of -2.60 suggests that the company is not a manipulator.

FMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -1.34
Current: -2.6

-3.31
-1.34

During the past 13 years, the highest Beneish M-Score of FMC Corp was -1.34. The lowest was -3.31. And the median was -2.50.


Definition

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 * 0.9856+0.528 * 0.8979+0.404 * 1.0085+0.892 * 1.0018+0.115 * 0.8492
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7163+4.679 * -0.0229-0.327 * 0.9558
=-2.60

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,828 Mil.
Revenue was 865.6 + 807.7 + 810.3 + 798.8 = $3,282 Mil.
Gross Profit was 337.6 + 279.5 + 301.3 + 281.4 = $1,200 Mil.
Total Current Assets was $2,849 Mil.
Total Assets was $6,139 Mil.
Property, Plant and Equipment(Net PPE) was $1,002 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $530 Mil.
Total Current Liabilities was $1,438 Mil.
Long-Term Debt was $1,799 Mil.
Net Income was 15.9 + 79.7 + 65.2 + 48.3 = $209 Mil.
Non Operating Income was -107.2 + 0.4 + 0 + -41.6 = $-148 Mil.
Cash Flow from Operations was 110 + 163.3 + 124.2 + 100.3 = $498 Mil.
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.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1828 / 3282.4) / (1851.4 / 3276.5)
=0.55690958 / 0.56505417
=0.9856

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1075.4 / 3276.5) / (1199.8 / 3282.4)
=0.32821608 / 0.36552523
=0.8979

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2849.2 + 1002.1) / 6139.3) / (1 - (2971.9 + 1016.4) / 6325.9)
=0.37268092 / 0.36952845
=1.0085

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3282.4 / 3276.5
=1.0018

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))
=(115.7 / (115.7 + 1016.4)) / (137.1 / (137.1 + 1002.1))
=0.10219945 / 0.12034761
=0.8492

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)
=(529.5 / 3282.4) / (737.9 / 3276.5)
=0.16131489 / 0.22520983
=0.7163

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)
=((1798.8 + 1438.2) / 6139.3) / ((2036.3 + 1453.3) / 6325.9)
=0.52725881 / 0.55163692
=0.9558

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(209.1 - -148.4 - 497.8) / 6139.3
=-0.0229

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 -2.60 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

FMC Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99340.96921.20151.03191.12071.02661.50571.03721.1490.9856
GMI 0.99180.96841.00820.92620.93020.97460.96961.03231.13220.8979
AQI 0.93580.93911.051.0431.0421.1920.70441.37891.34651.0085
SGI 1.12231.18320.90721.10260.97431.1230.91811.04091.00551.0018
DEPI 0.91041.07151.00240.91761.38510.8481.64160.72090.89390.8492
SGAI 0.98610.90281.05481.15711.01291.07451.10341.14221.24430.7163
LVGI 0.94611.05410.91591.06791.03431.03891.26390.95430.96350.9558
TATA -0.04750.0036-0.024-0.0556-0.00430.0131-0.00680.00260.1724-0.0296
M-score -2.62-2.36-2.45-2.70-2.40-2.26-2.29-2.27-1.36-2.63

FMC Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.76931.03720.92311.1070.90741.1491.0650.85010.93440.9856
GMI 0.88881.03231.03621.0951.1981.13221.14161.07920.95820.8979
AQI 0.90161.37890.96741.43341.55941.34651.85371.23091.15961.0085
SGI 0.75351.04091.06191.12351.1841.00551.08061.02631.01571.0018
DEPI 1.92140.72090.66350.69870.51910.89390.84740.73840.88650.8492
SGAI 1.3021.14221.48941.49771.36961.24430.67810.64950.63590.7163
LVGI 0.95720.95431.05351.02630.98620.96350.90230.93390.95480.9558
TATA 0.0073-0.00680.01510.11310.14590.17690.12990.0244-0.0106-0.0229
M-score -1.99-2.31-2.56-1.65-1.50-1.34-1.25-2.29-2.47-2.60
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK