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3M Co (FRA:MMM)
Beneish M-Score
-2.84 (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 -2.63 suggests that the company is not a manipulator.

FRA:MMM' s 10-Year Beneish M-Score Range
Min: -3.29   Max: -2.33
Current: -2.84

-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 -2.64.


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 * 1.0179+0.528 * 0.9821+0.404 * 0.8564+0.892 * 1.1441+0.115 * 1.0246
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9869+4.679 * -0.0377-0.327 * 1.1841
=-2.63

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was €4,079 Mil.
Revenue was 6848.43624699 + 7001.75552065 + 6260.3406326 + 6314.11499961 = €26,425 Mil.
Gross Profit was 3410.85271318 + 3471.31109674 + 2994.32278994 + 3051.13680453 = €12,928 Mil.
Total Current Assets was €11,967 Mil.
Total Assets was €27,968 Mil.
Property, Plant and Equipment(Net PPE) was €7,475 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,175 Mil.
Selling, General & Admin. Expense(SGA) was €5,358 Mil.
Total Current Liabilities was €4,540 Mil.
Long-Term Debt was €7,512 Mil.
Net Income was 1158.3355609 + 1107.82592627 + 956.204379562 + 1011.09645379 = €4,233 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1192.19460037 + 997.874896055 + 1770.4785077 + 1327.69457593 = €5,288 Mil.
Accounts Receivable was €3,503 Mil.
Revenue was 5986.60484286 + 5661.91887788 + 5517.97040169 + 5929.14388435 = €23,096 Mil.
Gross Profit was 2907.19069699 + 2747.45137734 + 2619.37741489 + 2822.26050483 = €11,096 Mil.
Total Current Assets was €9,710 Mil.
Total Assets was €25,002 Mil.
Property, Plant and Equipment(Net PPE) was €6,392 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,034 Mil.
Selling, General & Admin. Expense(SGA) was €4,746 Mil.
Total Current Liabilities was €5,181 Mil.
Long-Term Debt was €3,918 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)
=(4079.12322908 / 26424.6473999) / (3502.61279164 / 23095.6380068)
=0.15436812 / 0.1516569
=1.0179

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)
=(3471.31109674 / 23095.6380068) / (3410.85271318 / 26424.6473999)
=0.48044916 / 0.48922596
=0.9821

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 - (11967.3883988 + 7474.82847723) / 27967.5666043) / (1 - (9710.01692795 + 6392.13954515) / 25001.8399941)
=0.30482987 / 0.35596114
=0.8564

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
=26424.6473999 / 23095.6380068
=1.1441

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))
=(1033.71247376 / (1033.71247376 + 6392.13954515)) / (1175.18728152 / (1175.18728152 + 7474.82847723))
=0.13920456 / 0.13585955
=1.0246

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)
=(5358.17825119 / 26424.6473999) / (4745.50263305 / 23095.6380068)
=0.20277199 / 0.20547181
=0.9869

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)
=((7512.25162612 + 4539.78437138) / 27967.5666043) / ((3917.71546331 + 5181.42341945) / 25001.8399941)
=0.43092902 / 0.36393877
=1.1841

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
=(4233.46232052 - 0 - 5288.24258006) / 27967.5666043
=-0.0377

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 -2.63 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.9611.00931.01560.921.11160.96470.96321.03991.01450.9667
GMI 0.98841.03941.02011.01880.98790.98981.02390.98850.99420.9899
AQI 1.2580.79321.10771.07720.96141.0191.04760.94591.0350.9715
SGI 1.19540.97240.96851.11260.84831.27061.11651.01260.98761.1467
DEPI 0.99340.97031.10280.97651.01121.06370.96041.0420.97420.9615
SGAI 1.02271.01010.92771.01251.02240.96841.0140.97931.01340.9831
LVGI 0.96951.23170.96611.12080.86420.92730.92051.04361.07241.1548
TATA -0.05320.0006-0.0072-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0534
M-score -2.49-2.64-2.44-2.65-2.79-2.40-2.51-2.58-2.66-2.70

3M Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.97590.96080.98630.99770.98991.02271.05551.06251.10161.0179
GMI 0.98870.99811.00270.99430.99160.98760.98420.99030.98680.9821
AQI 0.97780.99991.01141.0351.03991.0281.00130.97150.88620.8564
SGI 1.06791.03031.01971.00430.98460.99481.00661.04331.11221.1441
DEPI 0.9950.97480.98910.96070.97060.9961.01481.04241.09441.0246
SGAI 0.98260.99271.00541.01371.01270.99990.98480.98290.98130.9869
LVGI 1.02460.96440.98351.07241.1131.10721.20821.15481.06611.1841
TATA -0.0299-0.0376-0.0306-0.0348-0.0359-0.0312-0.0455-0.0521-0.0458-0.0377
M-score -2.60-2.66-2.61-2.66-2.70-2.64-2.71-2.69-2.56-2.63
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