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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 -2.65 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(2751.62925416 / 23110.7698824)||/||(2919.43828529 / 23043.1419593)|
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 - (9750.92387288 + 6419.06873614) / 25107.1692535)||/||(1 - (10682.2001528 + 6362.8724217) / 26073.3384263)|
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))|
|=||(1011.47854929 / (1011.47854929 + 6362.8724217))||/||(1031.6175411 / (1031.6175411 + 6419.06873614))|
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)|
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)|
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|
|=||(3522.0398945 - 0||-||4309.98348891)||/||25107.1692535|
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.
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