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3M Co (FRA:MMM)
Beneish M-Score
-2.80 (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 -2.69 suggests that the company is not a manipulator.

FRA:MMM' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -2.35
Current: -2.8

-3.08
-2.35

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.35. The lowest was -3.08. And the median was -2.66.


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 * 1.0629+0.528 * 0.9903+0.404 * 0.9715+0.892 * 1.0432+0.115 * 1.0427
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9829+4.679 * -0.0521-0.327 * 1.1548
=-2.69

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was €3,437 Mil.
Revenue was 6260.3406326 + 6312.6454616 + 5985.28329654 + 5662.32827187 = €24,221 Mil.
Gross Profit was 2994.32278994 + 3050.42668735 + 2906.54893304 + 2747.65003615 = €11,699 Mil.
Total Current Assets was €9,542 Mil.
Total Assets was €25,360 Mil.
Property, Plant and Equipment(Net PPE) was €6,885 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,072 Mil.
Selling, General & Admin. Expense(SGA) was €4,923 Mil.
Total Current Liabilities was €4,865 Mil.
Long-Term Debt was €5,507 Mil.
Net Income was 956.204379562 + 1010.86113266 + 932.303164091 + 872.740419378 = €3,772 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1770.4785077 + 1327.38557021 + 1206.76968359 + 789.587852495 = €5,094 Mil.
Accounts Receivable was €3,100 Mil.
Revenue was 5516.7638484 + 5929.58801498 + 5877.17968158 + 5894.98069498 = €23,219 Mil.
Gross Profit was 2618.80466472 + 2822.47191011 + 2834.72327521 + 2830.11583012 = €11,106 Mil.
Total Current Assets was €9,281 Mil.
Total Assets was €24,453 Mil.
Property, Plant and Equipment(Net PPE) was €6,306 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,031 Mil.
Selling, General & Admin. Expense(SGA) was €4,802 Mil.
Total Current Liabilities was €5,465 Mil.
Long-Term Debt was €3,195 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)
=(3437.14517437 / 24220.5976626) / (3099.85422741 / 23218.5122399)
=0.14191001 / 0.13350787
=1.0629

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)
=(3050.42668735 / 23218.5122399) / (2994.32278994 / 24220.5976626)
=0.4783302 / 0.48301651
=0.9903

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 - (9541.76804542 + 6884.83373885) / 25360.0973236) / (1 - (9280.6122449 + 6306.12244898) / 24453.3527697)
=0.35226582 / 0.36259314
=0.9715

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
=24220.5976626 / 23218.5122399
=1.0432

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))
=(1030.57266814 / (1030.57266814 + 6306.12244898)) / (1071.89084091 / (1071.89084091 + 6884.83373885))
=0.14046824 / 0.13471509
=1.0427

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)
=(4922.95483005 / 24220.5976626) / (4801.58020246 / 23218.5122399)
=0.20325489 / 0.20679965
=0.9829

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)
=((5506.89375507 + 4864.55798865) / 25360.0973236) / ((3195.33527697 + 5465.01457726) / 24453.3527697)
=0.40896735 / 0.35415797
=1.1548

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
=(3772.10909569 - 0 - 5094.221614) / 25360.0973236
=-0.0521

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 -2.69 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 1.19510.97230.96821.11330.84791.27071.11651.0130.98721.147
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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.97520.9760.96090.98630.99710.98971.02241.05551.06291.1019
GMI 0.98790.98870.99811.00270.99430.99160.98760.98420.99030.9868
AQI 0.94590.97780.99991.01141.0351.03991.0281.00130.97150.8862
SGI 1.08021.06811.03061.02011.00440.98460.99461.00621.04321.1121
DEPI 0.98670.99510.9750.9890.96020.97040.99581.01491.04271.4596
SGAI 0.97860.98260.99271.00541.01371.01270.99990.98480.98290.9813
LVGI 1.04361.02460.96440.98351.07241.1131.10721.20821.15481.0661
TATA -0.0257-0.0299-0.0376-0.0306-0.0348-0.0359-0.0312-0.0455-0.0521-0.0457
M-score -2.59-2.60-2.66-2.61-2.66-2.70-2.64-2.71-2.69-2.52
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