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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.
3M Co has a M-score of -2.64 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of 3M Co was -2.28. The lowest was -3.01. And the median was -2.66.
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 3M Co 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 * 1.0234||+||0.528 * 0.9945||+||0.404 * 1.035||+||0.892 * 0.9993||+||0.115 * 0.9816|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0138||+||4.679 * -0.0349||-||0.327 * 1.074|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was €3,123 Mil.|
Revenue was 5557.26872247 + 5803.51906158 + 5922.07792208 + 5854.29447853 = €23,137 Mil.
Gross Profit was 2638.03230543 + 2762.46334311 + 2856.3789152 + 2810.58282209 = €11,067 Mil.
Total Current Assets was €9,349 Mil.
Total Assets was €24,633 Mil.
Property, Plant and Equipment(Net PPE) was €6,352 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,027 Mil.
Selling, General & Admin. Expense(SGA) was €4,785 Mil.
Total Current Liabilities was €5,505 Mil.
Long-Term Debt was €3,176 Mil.
Net Income was 809.838472834 + 901.759530792 + 914.438502674 + 865.797546012 = €3,492 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1463.28928047 + 843.841642229 + 1282.65851795 + 762.26993865 = €4,352 Mil.
|Accounts Receivable was €3,053 Mil.
Revenue was 5554.13533835 + 5780.26214341 + 6130.18714402 + 5688.44984802 = €23,153 Mil.
Gross Profit was 2553.38345865 + 2746.33770239 + 2981.28559805 + 2733.28267477 = €11,014 Mil.
Total Current Assets was €10,248 Mil.
Total Assets was €25,471 Mil.
Property, Plant and Equipment(Net PPE) was €6,299 Mil.
Depreciation, Depletion and Amortization(DDA) was €997 Mil.
Selling, General & Admin. Expense(SGA) was €4,723 Mil.
Total Current Liabilities was €4,662 Mil.
Long-Term Debt was €3,696 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)|
|=||(3122.61380323 / 23137.1601847)||/||(3053.38345865 / 23153.0344738)|
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)|
|=||(2762.46334311 / 23153.0344738)||/||(2638.03230543 / 23137.1601847)|
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 - (9348.75183554 + 6352.42290749) / 24632.8928047)||/||(1 - (10248.1203008 + 6299.2481203) / 25470.6766917)|
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))|
|=||(996.919190576 / (996.919190576 + 6299.2481203))||/||(1027.1700748 / (1027.1700748 + 6352.42290749))|
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)|
|=||(4785.24545419 / 23137.1601847)||/||(4723.24577512 / 23153.0344738)|
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)|
|=||((3176.21145374 + 5505.13950073) / 24632.8928047)||/||((3696.2406015 + 4661.65413534) / 25470.6766917)|
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|
|=||(3491.83405231 - 0||-||4352.0593793)||/||24632.8928047|
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.
3M Co has a M-score of -2.64 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
3M Co Annual Data
3M Co Quarterly Data