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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 Fomento Economico Mexicano SAB de CV was -1.42. The lowest was -3.12. And the median was -2.48.
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 Fomento Economico Mexicano SAB de CV 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $811 Mil.|
Revenue was 5365.85508741 + 4677.4988568 + 4852.96397747 + 2255.88187039 = $17,152 Mil.
Gross Profit was 2153.65327834 + 1832.97998064 + 1899.19375678 + 1034.15914684 = $6,920 Mil.
Total Current Assets was $5,081 Mil.
Total Assets was $23,980 Mil.
Property, Plant and Equipment(Net PPE) was $4,704 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $4,864 Mil.
Total Current Liabilities was $3,828 Mil.
Long-Term Debt was $5,036 Mil.
Net Income was 330.236209402 + 295.390974363 + 250.142126208 + 143.986874487 = $1,020 Mil.
Non Operating Income was -98.3034166003 + -74.0555981162 + -10.7886712492 + -0.328137817884 = $-183 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
|Accounts Receivable was $610 Mil.
Revenue was 3764.81526118 + 5468.83734985 + 5461.01037466 + 2933.98014098 = $17,629 Mil.
Gross Profit was 1558.34854172 + 2315.78152149 + 2290.73669304 + 1356.55271735 = $7,521 Mil.
Total Current Assets was $5,448 Mil.
Total Assets was $25,906 Mil.
Property, Plant and Equipment(Net PPE) was $5,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $5,322 Mil.
Total Current Liabilities was $3,397 Mil.
Long-Term Debt was $5,712 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)|
|=||(811.208229835 / 17152.1997921)||/||(609.896353431 / 17628.6431267)|
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)|
|=||(1832.97998064 / 17628.6431267)||/||(2153.65327834 / 17152.1997921)|
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 - (5080.55256128 + 4704.03524394) / 23980.1752824)||/||(1 - (5448.29723494 + 5208.4294618) / 25906.3393134)|
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))|
|=||(0 / (0 + 5208.4294618))||/||(0 / (0 + 4704.03524394))|
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)|
|=||(4864.18778578 / 17152.1997921)||/||(5321.74820054 / 17628.6431267)|
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)|
|=||((5036.38046586 + 3828.20921404) / 23980.1752824)||/||((5711.58017975 + 3396.5083847) / 25906.3393134)|
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|
|=||(1019.75618446 - -183.475823784||-||0)||/||23980.1752824|
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.
Fomento Economico Mexicano SAB de CV has a M-score of 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
Fomento Economico Mexicano SAB de CV Annual Data
Fomento Economico Mexicano SAB de CV Quarterly Data