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3M Co (FRA:MMM)
Beneish M-Score
-2.62 (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 -2.64 suggests that the company is not a manipulator.

FRA:MMM' s 10-Year Beneish M-Score Range
Min: -3.01   Max: -2.28
Current: -2.62

-3.01
-2.28

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.28. The lowest was -3.01. And the median was -2.66.


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 * 1.0234+0.528 * 0.9945+0.404 * 1.035+0.892 * 0.9993+0.115 * 0.9816
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0138+4.679 * -0.0349-0.327 * 1.074
=-2.64

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was €3,123 Mil.
Revenue was 5557.26872247 + 5803.51906158 + 5922.07792208 + 5854.29447853 = €23,137 Mil.
Gross Profit was 2638.03230543 + 2762.46334311 + 2856.3789152 + 2810.58282209 = €11,067 Mil.
Total Current Assets was €9,349 Mil.
Total Assets was €24,633 Mil.
Property, Plant and Equipment(Net PPE) was €6,352 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,027 Mil.
Selling, General & Admin. Expense(SGA) was €4,785 Mil.
Total Current Liabilities was €5,505 Mil.
Long-Term Debt was €3,176 Mil.
Net Income was 809.838472834 + 901.759530792 + 914.438502674 + 865.797546012 = €3,492 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1463.28928047 + 843.841642229 + 1282.65851795 + 762.26993865 = €4,352 Mil.
Accounts Receivable was €3,053 Mil.
Revenue was 5554.13533835 + 5780.26214341 + 6130.18714402 + 5688.44984802 = €23,153 Mil.
Gross Profit was 2553.38345865 + 2746.33770239 + 2981.28559805 + 2733.28267477 = €11,014 Mil.
Total Current Assets was €10,248 Mil.
Total Assets was €25,471 Mil.
Property, Plant and Equipment(Net PPE) was €6,299 Mil.
Depreciation, Depletion and Amortization(DDA) was €997 Mil.
Selling, General & Admin. Expense(SGA) was €4,723 Mil.
Total Current Liabilities was €4,662 Mil.
Long-Term Debt was €3,696 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)
=(3122.61380323 / 23137.1601847) / (3053.38345865 / 23153.0344738)
=0.13496098 / 0.13187833
=1.0234

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)
=(2762.46334311 / 23153.0344738) / (2638.03230543 / 23137.1601847)
=0.47571688 / 0.47834122
=0.9945

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 - (9348.75183554 + 6352.42290749) / 24632.8928047) / (1 - (10248.1203008 + 6299.2481203) / 25470.6766917)
=0.36259314 / 0.35033652
=1.035

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
=23137.1601847 / 23153.0344738
=0.9993

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))
=(996.919190576 / (996.919190576 + 6299.2481203)) / (1027.1700748 / (1027.1700748 + 6352.42290749))
=0.13663601 / 0.13919061
=0.9816

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)
=(4785.24545419 / 23137.1601847) / (4723.24577512 / 23153.0344738)
=0.20682078 / 0.20400116
=1.0138

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)
=((3176.21145374 + 5505.13950073) / 24632.8928047) / ((3696.2406015 + 4661.65413534) / 25470.6766917)
=0.35242921 / 0.32813791
=1.074

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
=(3491.83405231 - 0 - 4352.0593793) / 24632.8928047
=-0.0349

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 -2.64 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.80450.9611.00931.08210.89861.06820.98920.96571.01141.0145
GMI 0.98110.9841.03941.02011.01880.98790.98981.02390.98850.9942
AQI 1.24911.2580.79321.10771.07720.96141.0191.04760.94591.035
SGI 1.05741.14321.01210.94111.14840.84971.23071.15110.97951.0081
DEPI 0.98510.99340.97031.10280.97651.01121.06370.96041.0420.9742
SGAI 1.00090.98671.01010.92771.01251.02240.96841.0140.97931.0134
LVGI 0.84750.97091.23320.97361.12080.85510.93730.92051.0371.074
TATA -0.0659-0.05190.0039-0.0041-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345
M-score -2.78-2.52-2.59-2.39-2.64-2.83-2.42-2.47-2.64-2.64

3M Co Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.02331.03571.03761.03530.9940.91610.97480.96380.98911.0234
GMI 1.02771.02481.01891.00280.99060.98740.98840.99811.00260.9945
AQI 1.12491.04761.011.00521.02590.94590.97780.99991.01141.035
SGI 1.08911.07331.08691.11781.10321.08141.05811.01381.00170.9993
DEPI 1.05641.01861.00191.00880.97530.95830.99440.97770.99160.9816
SGAI 1.02611.01441.00980.99890.98630.97850.98240.99271.00531.0138
LVGI 0.99140.92050.92851.02960.95881.0371.02460.96440.98351.074
TATA -0.0294-0.0314-0.0323-0.0281-0.0265-0.0259-0.0299-0.0371-0.0312-0.0349
M-score -2.45-2.47-2.48-2.48-2.50-2.65-2.61-2.67-2.63-2.64
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