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3M Co (FRA:MMM)
Beneish M-Score
-2.76 (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 -2.71 suggests that the company is not a manipulator.

FRA:MMM' s 10-Year Beneish M-Score Range
Min: -3.29   Max: -2.33
Current: -2.76

-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 * 1.0555+0.528 * 0.9842+0.404 * 1.0013+0.892 * 1.0062+0.115 * 1.0149
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9848+4.679 * -0.0455-0.327 * 1.2082
=-2.71

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was €3,655 Mil.
Revenue was 6312.6454616 + 5985.28329654 + 5662.32827187 + 5516.7638484 = €23,477 Mil.
Gross Profit was 3050.42668735 + 2906.54893304 + 2747.65003615 + 2618.80466472 = €11,323 Mil.
Total Current Assets was €9,838 Mil.
Total Assets was €25,427 Mil.
Property, Plant and Equipment(Net PPE) was €6,593 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,048 Mil.
Selling, General & Admin. Expense(SGA) was €4,779 Mil.
Total Current Liabilities was €5,978 Mil.
Long-Term Debt was €4,054 Mil.
Net Income was 1010.86113266 + 932.303164091 + 872.740419378 + 803.935860058 = €3,620 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1327.38557021 + 1206.76968359 + 789.587852495 + 1452.62390671 = €4,776 Mil.
Accounts Receivable was €3,441 Mil.
Revenue was 5929.58801498 + 5877.17968158 + 5894.98069498 + 5630.33536585 = €23,332 Mil.
Gross Profit was 2822.47191011 + 2834.72327521 + 2830.11583012 + 2588.41463415 = €11,076 Mil.
Total Current Assets was €9,949 Mil.
Total Assets was €25,172 Mil.
Property, Plant and Equipment(Net PPE) was €6,328 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,023 Mil.
Selling, General & Admin. Expense(SGA) was €4,823 Mil.
Total Current Liabilities was €5,572 Mil.
Long-Term Debt was €2,646 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)
=(3654.77114042 / 23477.0208784) / (3441.19850187 / 23332.0837574)
=0.1556744 / 0.14748783
=1.0555

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)
=(2906.54893304 / 23332.0837574) / (3050.42668735 / 23477.0208784)
=0.47469938 / 0.48231973
=0.9842

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 - (9837.85880528 + 6593.4833204) / 25427.4631497) / (1 - (9949.06367041 + 6328.08988764) / 25171.5355805)
=0.35379546 / 0.35335079
=1.0013

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
=23477.0208784 / 23332.0837574
=1.0062

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))
=(1023.417367 / (1023.417367 + 6328.08988764)) / (1048.23441971 / (1048.23441971 + 6593.4833204))
=0.13921191 / 0.13717262
=1.0149

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)
=(4778.86104377 / 23477.0208784) / (4822.86166801 / 23332.0837574)
=0.20355483 / 0.20670514
=0.9848

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)
=((4053.52986811 + 5977.50193949) / 25427.4631497) / ((2646.44194757 + 5572.28464419) / 25171.5355805)
=0.39449597 / 0.32650875
=1.2082

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
=(3619.84057619 - 0 - 4776.367013) / 25427.4631497
=-0.0455

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 -2.71 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 1.00751.19510.97230.96821.11330.84791.27071.11651.0130.9872
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 -2.68-2.49-2.64-2.44-2.65-2.79-2.40-2.51-2.58-2.66

3M Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.05781.01870.97520.9760.96090.98630.99710.98971.02241.0555
GMI 1.0030.99070.98790.98870.99811.00270.99430.99160.98760.9842
AQI 1.00521.02590.94590.97780.99991.01141.0351.03991.0281.0013
SGI 1.08031.08481.08021.06811.03061.02011.00440.98460.99461.0062
DEPI 1.02760.9960.98670.99510.9750.9890.96020.97040.99581.0149
SGAI 0.99930.98590.97860.98260.99271.00541.01371.01270.99990.9848
LVGI 1.02960.95881.04361.02460.96440.98351.07241.1131.10721.2082
TATA -0.0281-0.0258-0.0257-0.0299-0.0376-0.0306-0.0348-0.0359-0.0312-0.0455
M-score -2.49-2.49-2.59-2.60-2.66-2.61-2.66-2.70-2.64-2.71
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