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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 -1.26. The lowest was -3.51. And the median was -2.60.
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 (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $493 Mil.|
Revenue was 2361.23313866 + 2255.88187039 + 9664.61210013 + 3156.37984438 = $17,438 Mil.
Gross Profit was 1130.03255982 + 1034.15914684 + 3617.98836128 + 1479.56485609 = $7,262 Mil.
Total Current Assets was $2,223 Mil.
Total Assets was $13,411 Mil.
Property, Plant and Equipment(Net PPE) was $3,146 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $5,189 Mil.
Total Current Liabilities was $1,865 Mil.
Long-Term Debt was $4,259 Mil.
Net Income was 172.360328699 + 143.986874487 + 570.641506835 + 252.549671376 = $1,140 Mil.
Non Operating Income was -23.903044085 + -0.328137817884 + 6.88681519231 + -74.9414519906 = $-92 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
|Accounts Receivable was $944 Mil.
Revenue was 3188.89880861 + 2933.98014098 + 11403.5357417 + 2872.00306396 = $20,398 Mil.
Gross Profit was 1504.47926608 + 1356.55271735 + 4469.02382782 + 1346.22749904 = $8,676 Mil.
Total Current Assets was $6,116 Mil.
Total Assets was $28,091 Mil.
Property, Plant and Equipment(Net PPE) was $5,727 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $6,257 Mil.
Total Current Liabilities was $3,996 Mil.
Long-Term Debt was $5,679 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)|
|=||(493.371750478 / 17438.1069536)||/||(944.263153034 / 20398.4177553)|
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)|
|=||(1034.15914684 / 20398.4177553)||/||(1130.03255982 / 17438.1069536)|
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 - (2223.43531965 + 3145.64060158) / 13410.6413768)||/||(1 - (6116.19924268 + 5727.45743928) / 28090.7705569)|
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 + 5727.45743928))||/||(0 / (0 + 3145.64060158))|
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)|
|=||(5189.39972658 / 17438.1069536)||/||(6256.75420841 / 20398.4177553)|
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)|
|=||((4259.13483901 + 1865.47108378) / 13410.6413768)||/||((5678.8935751 + 3996.16722593) / 28090.7705569)|
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|
|=||(1139.5383814 - -92.2858187012||-||0)||/||13410.6413768|
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