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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 -1.43. 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 * 0.9344||+||0.528 * 0.9582||+||0.404 * 1.1596||+||0.892 * 1.0157||+||0.115 * 0.8865|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6359||+||4.679 * -0.0499||-||0.327 * 0.9548|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,603 Mil.|
Revenue was 807.7 + 810.3 + 798.8 + 899.3 = $3,316 Mil.
Gross Profit was 279.5 + 301.3 + 281.4 + 298.6 = $1,161 Mil.
Total Current Assets was $2,804 Mil.
Total Assets was $6,210 Mil.
Property, Plant and Equipment(Net PPE) was $1,031 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $520 Mil.
Total Current Liabilities was $1,309 Mil.
Long-Term Debt was $1,913 Mil.
Net Income was 79.7 + 65.2 + 48.3 + -204.1 = $-11 Mil.
Non Operating Income was 0.4 + 0 + -41.6 + -0.2 = $-41 Mil.
Cash Flow from Operations was 163.3 + 124.2 + 100.3 + -47.2 = $341 Mil.
|Accounts Receivable was $1,690 Mil.
Revenue was 830.7 + 887.1 + 659.4 + 887.8 = $3,265 Mil.
Gross Profit was 220.3 + 305.8 + 250.7 + 318.3 = $1,095 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 $115 Mil.
Selling, General & Admin. Expense(SGA) was $806 Mil.
Total Current Liabilities was $1,455 Mil.
Long-Term Debt was $2,049 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)|
|=||(1603.4 / 3316.1)||/||(1689.6 / 3265)|
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)|
|=||(1095.1 / 3265)||/||(1160.8 / 3316.1)|
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 - (2804.1 + 1031) / 6209.8)||/||(1 - (3238.1 + 1082.8) / 6447)|
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))|
|=||(114.8 / (114.8 + 1082.8))||/||(125 / (125 + 1031))|
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)|
|=||(520.4 / 3316.1)||/||(805.8 / 3265)|
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)|
|=||((1913.3 + 1308.8) / 6209.8)||/||((2048.5 + 1455) / 6447)|
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|
|=||(-10.9 - -41.4||-||340.6)||/||6209.8|
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 -2.65 suggests that the company will not 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