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3M Co (FRA:MMM)
Beneish M-Score
-2.62 (As of Today)

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 -2.65 suggests that the company is not a manipulator.

FRA:MMM' s 10-Year Beneish M-Score Range
Min: -3.29   Max: -2.33
Current: -2.62

-3.29
-2.33

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.33. The lowest was -3.29. And the median was -2.63.


Definition

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 * 1.0167+0.528 * 0.9876+0.404 * 1.028+0.892 * 0.9971+0.115 * 0.9906
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1+4.679 * -0.0314-0.327 * 1.1072
=-2.65

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was €3,517 Mil.
Revenue was 6011.8255728 + 5670.52860246 + 5557.26872247 + 5803.51906158 = €23,043 Mil.
Gross Profit was 2919.43828529 + 2751.62925416 + 2638.03230543 + 2762.46334311 = €11,072 Mil.
Total Current Assets was €9,751 Mil.
Total Assets was €25,107 Mil.
Property, Plant and Equipment(Net PPE) was €6,419 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,032 Mil.
Selling, General & Admin. Expense(SGA) was €4,735 Mil.
Total Current Liabilities was €5,203 Mil.
Long-Term Debt was €3,934 Mil.
Net Income was 936.437546194 + 874.004344678 + 809.838472834 + 901.759530792 = €3,522 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1212.12121212 + 790.731354091 + 1463.28928047 + 843.841642229 = €4,310 Mil.
Accounts Receivable was €3,470 Mil.
Revenue was 5922.07792208 + 5854.29447853 + 5554.13533835 + 5780.26214341 = €23,111 Mil.
Gross Profit was 2856.3789152 + 2810.58282209 + 2553.38345865 + 2746.33770239 = €10,967 Mil.
Total Current Assets was €10,682 Mil.
Total Assets was €26,073 Mil.
Property, Plant and Equipment(Net PPE) was €6,363 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,011 Mil.
Selling, General & Admin. Expense(SGA) was €4,749 Mil.
Total Current Liabilities was €4,840 Mil.
Long-Term Debt was €3,731 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3517.36881005 / 23043.1419593) / (3469.82429335 / 23110.7698824)
=0.15264276 / 0.15013884
=1.0167

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2751.62925416 / 23110.7698824) / (2919.43828529 / 23043.1419593)
=0.47452694 / 0.48047107
=0.9876

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (9750.92387288 + 6419.06873614) / 25107.1692535) / (1 - (10682.2001528 + 6362.8724217) / 26073.3384263)
=0.35596114 / 0.34626428
=1.028

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=23043.1419593 / 23110.7698824
=0.9971

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))
=(1011.47854929 / (1011.47854929 + 6362.8724217)) / (1031.6175411 / (1031.6175411 + 6419.06873614))
=0.1371617 / 0.1384594
=0.9906

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)
=(4735.04880321 / 23043.1419593) / (4749.13204901 / 23110.7698824)
=0.20548625 / 0.20549432
=1

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)
=((3934.22025129 + 5203.25203252) / 25107.1692535) / ((3731.09243697 + 4839.57219251) / 26073.3384263)
=0.36393877 / 0.32871374
=1.1072

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(3522.0398945 - 0 - 4309.98348891) / 25107.1692535
=-0.0314

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 -2.65 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

3M Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93730.9611.00931.01560.921.11160.96470.96321.03991.0145
GMI 0.97680.98841.03941.02011.01880.98790.98981.02390.98850.9942
AQI 1.24911.2580.79321.10771.07720.96141.0191.04760.94591.035
SGI 1.05741.14321.01210.94111.14840.84971.23071.15110.97951.0081
DEPI 0.98510.99340.97031.10280.97651.01121.06370.96041.0420.9742
SGAI 0.96571.02271.01010.92771.01251.02240.96841.0140.97931.0134
LVGI 0.84770.96951.23170.96611.12080.86420.92730.92051.04361.0724
TATA -0.0624-0.05320.0006-0.0072-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345
M-score -2.64-2.53-2.60-2.46-2.62-2.79-2.44-2.48-2.61-2.64

3M Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.03530.9940.94190.97480.96380.98911.02340.99841.01671.0793
GMI 1.00280.99060.98740.98840.99811.00260.99450.99180.98760.9843
AQI 1.00521.02590.94590.97780.99991.01141.0351.03991.0281.0013
SGI 1.11781.10321.08141.05811.01381.00170.99930.98430.99711.0228
DEPI 1.00880.97530.95830.99440.97770.99160.98160.97730.99061.3511
SGAI 0.99890.98630.97850.98240.99271.00531.01381.012910.9846
LVGI 1.02960.95881.04361.02460.96440.98351.07241.1131.10721.2082
TATA -0.0281-0.0265-0.0259-0.0299-0.0371-0.0312-0.0349-0.0362-0.0314-0.0451
M-score -2.48-2.50-2.63-2.61-2.67-2.63-2.64-2.69-2.65-2.63
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