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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 -1.49. The lowest was -3.31. 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 * 1.065||+||0.528 * 1.1416||+||0.404 * 1.8537||+||0.892 * 1.0806||+||0.115 * 0.8474|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6781||+||4.679 * 0.0796||-||0.327 * 0.9023|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,769 Mil.|
Revenue was 798.8 + 899.3 + 830.7 + 887.1 = $3,416 Mil.
Gross Profit was 281.4 + 298.6 + 220.3 + 305.8 = $1,106 Mil.
Total Current Assets was $2,955 Mil.
Total Assets was $6,390 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $127 Mil.
Selling, General & Admin. Expense(SGA) was $567 Mil.
Total Current Liabilities was $1,451 Mil.
Long-Term Debt was $1,986 Mil.
Net Income was 48.3 + -204.1 + -2.4 + 742.3 = $584 Mil.
Non Operating Income was -41.6 + 117.6 + -40.4 + 0.1 = $36 Mil.
Cash Flow from Operations was 100.3 + -47.2 + -137.9 + 124.6 = $40 Mil.
|Accounts Receivable was $1,537 Mil.
Revenue was 659.4 + 887.8 + 819.1 + 794.9 = $3,161 Mil.
Gross Profit was 250.7 + 318.3 + 283.5 + 316.1 = $1,169 Mil.
Total Current Assets was $3,330 Mil.
Total Assets was $5,312 Mil.
Property, Plant and Equipment(Net PPE) was $903 Mil.
Depreciation, Depletion and Amortization(DDA) was $92 Mil.
Selling, General & Admin. Expense(SGA) was $773 Mil.
Total Current Liabilities was $2,016 Mil.
Long-Term Debt was $1,151 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)|
|=||(1769.2 / 3415.9)||/||(1537.4 / 3161.2)|
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)|
|=||(298.6 / 3161.2)||/||(281.4 / 3415.9)|
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 - (2955.2 + 1027.8) / 6390.4)||/||(1 - (3329.6 + 902.6) / 5311.7)|
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))|
|=||(92.4 / (92.4 + 902.6))||/||(126.5 / (126.5 + 1027.8))|
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)|
|=||(566.5 / 3415.9)||/||(773.1 / 3161.2)|
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)|
|=||((1986.2 + 1451.3) / 6390.4)||/||((1150.9 + 2015.6) / 5311.7)|
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|
|=||(584.1 - 35.7||-||39.8)||/||6390.4|
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 -1.49 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