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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 * 1.1019||+||0.528 * 0.9868||+||0.404 * 0.8862||+||0.892 * 1.1121||+||0.115 * 1.0947|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9813||+||4.679 * -0.0457||-||0.327 * 1.0661|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was €4,074 Mil.|
Revenue was 7003.69685767 + 6260.3406326 + 6312.6454616 + 5985.28329654 = €25,562 Mil.
Gross Profit was 3472.27356747 + 2994.32278994 + 3050.42668735 + 2906.54893304 = €12,424 Mil.
Total Current Assets was €11,569 Mil.
Total Assets was €28,321 Mil.
Property, Plant and Equipment(Net PPE) was €7,658 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,132 Mil.
Selling, General & Admin. Expense(SGA) was €5,188 Mil.
Total Current Liabilities was €4,697 Mil.
Long-Term Debt was €5,970 Mil.
Net Income was 1108.13308688 + 956.204379562 + 1010.86113266 + 932.303164091 = €4,008 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 998.151571165 + 1770.4785077 + 1327.38557021 + 1206.76968359 = €5,303 Mil.
|Accounts Receivable was €3,325 Mil.
Revenue was 5662.32827187 + 5516.7638484 + 5929.58801498 + 5877.17968158 = €22,986 Mil.
Gross Profit was 2747.65003615 + 2618.80466472 + 2822.47191011 + 2834.72327521 = €11,024 Mil.
Total Current Assets was €9,228 Mil.
Total Assets was €24,257 Mil.
Property, Plant and Equipment(Net PPE) was €6,240 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,024 Mil.
Selling, General & Admin. Expense(SGA) was €4,755 Mil.
Total Current Liabilities was €5,387 Mil.
Long-Term Debt was €3,182 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)|
|=||(4073.93715342 / 25561.9662484)||/||(3324.65654375 / 22985.8598168)|
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)|
|=||(2994.32278994 / 22985.8598168)||/||(3472.27356747 / 25561.9662484)|
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 - (11569.3160813 + 7658.04066543) / 28320.702403)||/||(1 - (9227.76572668 + 6240.05784526) / 24256.6883586)|
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))|
|=||(1024.18623833 / (1024.18623833 + 6240.05784526))||/||(1132.12649888 / (1132.12649888 + 7658.04066543))|
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)|
|=||(5188.38279545 / 25561.9662484)||/||(4754.59655938 / 22985.8598168)|
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)|
|=||((5969.50092421 + 4696.85767098) / 28320.702403)||/||((3182.21258134 + 5386.84020246) / 24256.6883586)|
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|
|=||(4007.50176319 - 0||-||5302.78533267)||/||28320.702403|
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 -2.56 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