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3M Co (FRA:MMM)
Beneish M-Score
-2.88 (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 -2.57 suggests that the company is not a manipulator.

FRA:MMM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36   Max: -2.47
Current: -2.88

-3.36
-2.47

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.47. The lowest was -3.36. And the median was -2.77.


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 * 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
=-2.57

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

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

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)
=(4107.63610443 / 26982.1353585) / (3655.6219446 / 23480.6091221)
=0.1522354 / 0.15568684
=0.9778

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)
=(3410.85271318 / 23480.6091221) / (3417.08990466 / 26982.1353585)
=0.48231953 / 0.49268067
=0.979

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 - (10343.0455315 + 7547.00169295) / 29633.7877573) / (1 - (9840.14898735 + 6595.01823543) / 25433.3824785)
=0.39629563 / 0.35379546
=1.1201

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
=26982.1353585 / 23480.6091221
=1.1491

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))
=0.13716313 / 0.13914939
=0.9857

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)
=0.2031795 / 0.20355446
=0.9982

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)
=0.48126766 / 0.39449597
=1.22

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
=(4377.13731822 - 0 - 5443.21752209) / 29633.7877573
=-0.036

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.


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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00931.01560.921.11160.96470.96321.03991.01450.9667
GMI 1.03941.02011.01880.98790.98981.02390.98850.99420.9899
AQI 0.79321.10771.07720.96141.0191.04760.94591.0350.9715
SGI 0.97240.96851.11260.84831.27061.11651.01260.98761.1467
DEPI 0.97031.10280.97651.01121.06370.96041.0420.97420.9615
SGAI 1.01010.92771.01251.02240.96841.0140.97931.01340.9831
LVGI 1.23170.96611.12080.86420.92730.92051.04361.07241.1548
TATA 0.0006-0.0072-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0534
M-score -2.64-2.44-2.65-2.79-2.40-2.51-2.58-2.66-2.70

3M Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98630.99770.98991.02271.05551.06251.10161.01790.97780.9801
GMI 1.00270.99430.99160.98760.98420.99030.98680.98210.9790.9822
AQI 1.01141.0351.03991.0281.00130.97150.88620.85641.12011.1468
SGI 1.01971.00430.98460.99481.00661.04331.11221.14411.14911.132
DEPI 0.98910.96070.97060.9961.01481.04241.09441.02460.98571.2598
SGAI 1.00541.01371.01270.99990.98480.98290.98130.98690.99821.005
LVGI 0.98351.07241.1131.10721.20821.15481.06611.18411.221.1861
TATA -0.0306-0.0348-0.0359-0.0312-0.0455-0.0521-0.0458-0.0377-0.036-0.0481
M-score -2.61-2.66-2.70-2.64-2.71-2.69-2.56-2.63-2.57-2.59
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