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3M Co (FRA:MMM)
Beneish M-Score
-2.63 (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 -2.65 suggests that the company is not a manipulator.

FRA:MMM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.29   Max: -2.33
Current: -2.63

-3.29
-2.33

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.


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 * 0.995+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
=-2.65

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

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

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)
=(4153.61338555 / 27043.6679342) / (4079.12322908 / 26424.6473999)
=0.15358913 / 0.15436812
=0.995

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)
=(12927.6234044 / 26424.6473999) / (13391.9912811 / 27043.6679342)
=0.48922596 / 0.49519878
=0.9879

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 - (10177.999288 + 7657.52936988) / 29579.0316839) / (1 - (11967.3883988 + 7474.82847723) / 27967.5666043)
=0.39702121 / 0.30482987
=1.3024

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
=27043.6679342 / 26424.6473999
=1.0234

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))
=0.13585955 / 0.14762163
=0.9203

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)
=0.20353301 / 0.20277199
=1.0038

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)
=0.49805927 / 0.43092902
=1.1558

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
=(4401.59773603 - 0 - 5904.11296773) / 29579.0316839
=-0.0508

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.


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 1.00931.01560.921.11160.96470.96321.03991.01450.96671.0303
GMI 1.03941.02011.01880.98790.98981.02390.98850.99420.98990.9822
AQI 0.79321.10771.07720.96141.0191.04760.94591.0350.92051.2103
SGI 0.97240.96851.11260.84831.27061.11651.01260.98761.14671.0769
DEPI 0.97031.10280.97651.01121.06370.96041.0420.97420.96150.9864
SGAI 1.01010.92771.01251.02240.96841.0140.97931.01340.98311.0045
LVGI 1.23170.96611.12080.86420.92730.92051.04361.07241.15161.1929
TATA 0.0006-0.0061-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0535-0.0485
M-score -2.64-2.43-2.65-2.79-2.40-2.51-2.58-2.66-2.72-2.60

3M Co Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.98991.02271.05551.06251.10161.01790.97780.98010.93370.995
GMI 0.99160.98760.98420.99030.98680.98210.9790.98220.98450.9879
AQI 1.03991.0281.00130.92050.88620.85641.12011.21031.27421.3024
SGI 0.98460.99481.00661.04331.11221.14411.14911.1321.05911.0234
DEPI 0.97060.9961.01481.04241.09441.02460.98570.94450.89130.9203
SGAI 1.01270.99990.98480.98290.98130.98690.99821.0051.00041.0038
LVGI 1.1131.10721.20821.15161.06611.18411.221.19291.29651.1558
TATA -0.0359-0.0312-0.0455-0.0522-0.0458-0.0377-0.036-0.0481-0.0521-0.0508
M-score -2.70-2.64-2.71-2.71-2.56-2.63-2.57-2.60-2.74-2.65
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