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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 -2.35. The lowest was -3.08. And the median was -2.66.
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 * 1.0629||+||0.528 * 0.9903||+||0.404 * 0.9715||+||0.892 * 1.0432||+||0.115 * 1.3677|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9829||+||4.679 * -0.0521||-||0.327 * 1.1494|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was €3,437 Mil.|
Revenue was 6260.3406326 + 6312.6454616 + 5985.28329654 + 5662.32827187 = €24,221 Mil.
Gross Profit was 2994.32278994 + 3050.42668735 + 2906.54893304 + 2747.65003615 = €11,699 Mil.
Total Current Assets was €9,542 Mil.
Total Assets was €25,360 Mil.
Property, Plant and Equipment(Net PPE) was €6,885 Mil.
Depreciation, Depletion and Amortization(DDA) was €788 Mil.
Selling, General & Admin. Expense(SGA) was €4,923 Mil.
Total Current Liabilities was €4,865 Mil.
Long-Term Debt was €5,459 Mil.
Net Income was 956.204379562 + 1010.86113266 + 932.303164091 + 872.740419378 = €3,772 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1770.4785077 + 1327.38557021 + 1206.76968359 + 789.587852495 = €5,094 Mil.
|Accounts Receivable was €3,100 Mil.
Revenue was 5516.7638484 + 5929.58801498 + 5877.17968158 + 5894.98069498 = €23,219 Mil.
Gross Profit was 2618.80466472 + 2822.47191011 + 2834.72327521 + 2830.11583012 = €11,106 Mil.
Total Current Assets was €9,281 Mil.
Total Assets was €24,453 Mil.
Property, Plant and Equipment(Net PPE) was €6,306 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,031 Mil.
Selling, General & Admin. Expense(SGA) was €4,802 Mil.
Total Current Liabilities was €5,465 Mil.
Long-Term Debt was €3,195 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)|
|=||(3437.14517437 / 24220.5976626)||/||(3099.85422741 / 23218.5122399)|
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)|
|=||(3050.42668735 / 23218.5122399)||/||(2994.32278994 / 24220.5976626)|
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 - (9541.76804542 + 6884.83373885) / 25360.0973236)||/||(1 - (9280.6122449 + 6306.12244898) / 24453.3527697)|
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))|
|=||(1030.57266814 / (1030.57266814 + 6306.12244898))||/||(788.030338076 / (788.030338076 + 6884.83373885))|
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)|
|=||(4922.95483005 / 24220.5976626)||/||(4801.58020246 / 23218.5122399)|
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)|
|=||((5459.04298459 + 4864.55798865) / 25360.0973236)||/||((3195.33527697 + 5465.01457726) / 24453.3527697)|
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|
|=||(3772.10909569 - 0||-||5094.221614)||/||25360.0973236|
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.
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