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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.
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.
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 * 0.995||+||0.528 * 0.9879||+||0.404 * 1.3024||+||0.892 * 1.0234||+||0.115 * 0.9203|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0038||+||4.679 * -0.0508||-||0.327 * 1.1558|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was €4,154 Mil.|
Revenue was 6819.15272339 + 6653.19683908 + 6699.71541357 + 6871.60295821 = €27,044 Mil.
Gross Profit was 3438.05624778 + 3350.39511494 + 3186.45001377 + 3417.08990466 = €13,392 Mil.
Total Current Assets was €10,178 Mil.
Total Assets was €29,579 Mil.
Property, Plant and Equipment(Net PPE) was €7,658 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,326 Mil.
Selling, General & Admin. Expense(SGA) was €5,504 Mil.
Total Current Liabilities was €6,456 Mil.
Long-Term Debt was €8,276 Mil.
Net Income was 1148.98540406 + 1144.93534483 + 952.905535665 + 1154.77145148 = €4,402 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1143.64542542 + 1131.46551724 + 2146.33250711 + 1482.66951795 = €5,904 Mil.
|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.
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)|
|=||(4153.61338555 / 27043.6679342)||/||(4079.12322908 / 26424.6473999)|
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)|
|=||(12927.6234044 / 26424.6473999)||/||(13391.9912811 / 27043.6679342)|
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 - (10177.999288 + 7657.52936988) / 29579.0316839)||/||(1 - (11967.3883988 + 7474.82847723) / 27967.5666043)|
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))|
|=||(1175.18728152 / (1175.18728152 + 7474.82847723))||/||(1326.19155262 / (1326.19155262 + 7657.52936988))|
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)|
|=||(5504.27904725 / 27043.6679342)||/||(5358.17825119 / 26424.6473999)|
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)|
|=||((8276.07689569 + 6456.03417586) / 29579.0316839)||/||((7512.25162612 + 4539.78437138) / 27967.5666043)|
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|
|=||(4401.59773603 - 0||-||5904.11296773)||/||29579.0316839|
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