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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 * 0.9778||+||0.528 * 0.979||+||0.404 * 1.1201||+||0.892 * 1.1491||+||0.115 * 0.9857|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9982||+||4.679 * -0.036||-||0.327 * 1.22|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was €4,108 Mil.|
Revenue was 6871.60295821 + 6848.43624699 + 7001.75552065 + 6260.3406326 = €26,982 Mil.
Gross Profit was 3417.08990466 + 3410.85271318 + 3471.31109674 + 2994.32278994 = €13,294 Mil.
Total Current Assets was €10,343 Mil.
Total Assets was €29,634 Mil.
Property, Plant and Equipment(Net PPE) was €7,547 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,220 Mil.
Selling, General & Admin. Expense(SGA) was €5,482 Mil.
Total Current Liabilities was €6,266 Mil.
Long-Term Debt was €7,996 Mil.
Net Income was 1154.77145148 + 1158.3355609 + 1107.82592627 + 956.204379562 = €4,377 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1482.66951795 + 1192.19460037 + 997.874896055 + 1770.4785077 = €5,443 Mil.
|Accounts Receivable was €3,656 Mil.
Revenue was 6314.11499961 + 5986.60484286 + 5661.91887788 + 5517.97040169 = €23,481 Mil.
Gross Profit was 3051.13680453 + 2907.19069699 + 2747.45137734 + 2619.37741489 = €11,325 Mil.
Total Current Assets was €9,840 Mil.
Total Assets was €25,433 Mil.
Property, Plant and Equipment(Net PPE) was €6,595 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,048 Mil.
Selling, General & Admin. Expense(SGA) was €4,780 Mil.
Total Current Liabilities was €5,979 Mil.
Long-Term Debt was €4,054 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)|
|=||(4107.63610443 / 26982.1353585)||/||(3655.6219446 / 23480.6091221)|
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)|
|=||(3410.85271318 / 23480.6091221)||/||(3417.08990466 / 26982.1353585)|
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 - (10343.0455315 + 7547.00169295) / 29633.7877573)||/||(1 - (9840.14898735 + 6595.01823543) / 25433.3824785)|
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))|
|=||(1048.39440532 / (1048.39440532 + 6595.01823543))||/||(1219.91046603 / (1219.91046603 + 7547.00169295))|
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)|
|=||(5482.21676772 / 26982.1353585)||/||(4779.58279692 / 23480.6091221)|
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)|
|=||((7996.07947964 + 6265.70435712) / 29633.7877573)||/||((4054.47350043 + 5978.89345852) / 25433.3824785)|
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|
|=||(4377.13731822 - 0||-||5443.21752209)||/||29633.7877573|
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 -2.57 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