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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 * 1.0179||+||0.528 * 0.9821||+||0.404 * 0.8564||+||0.892 * 1.1441||+||0.115 * 1.0246|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9869||+||4.679 * -0.0377||-||0.327 * 1.1841|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|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.
Net Income was 1158.3355609 + 1107.82592627 + 956.204379562 + 1011.09645379 = €4,233 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1192.19460037 + 997.874896055 + 1770.4785077 + 1327.69457593 = €5,288 Mil.
|Accounts Receivable was €3,503 Mil.
Revenue was 5986.60484286 + 5661.91887788 + 5517.97040169 + 5929.14388435 = €23,096 Mil.
Gross Profit was 2907.19069699 + 2747.45137734 + 2619.37741489 + 2822.26050483 = €11,096 Mil.
Total Current Assets was €9,710 Mil.
Total Assets was €25,002 Mil.
Property, Plant and Equipment(Net PPE) was €6,392 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,034 Mil.
Selling, General & Admin. Expense(SGA) was €4,746 Mil.
Total Current Liabilities was €5,181 Mil.
Long-Term Debt was €3,918 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)|
|=||(4079.12322908 / 26424.6473999)||/||(3502.61279164 / 23095.6380068)|
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)|
|=||(3471.31109674 / 23095.6380068)||/||(3410.85271318 / 26424.6473999)|
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 - (11967.3883988 + 7474.82847723) / 27967.5666043)||/||(1 - (9710.01692795 + 6392.13954515) / 25001.8399941)|
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))|
|=||(1033.71247376 / (1033.71247376 + 6392.13954515))||/||(1175.18728152 / (1175.18728152 + 7474.82847723))|
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)|
|=||(5358.17825119 / 26424.6473999)||/||(4745.50263305 / 23095.6380068)|
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)|
|=||((7512.25162612 + 4539.78437138) / 27967.5666043)||/||((3917.71546331 + 5181.42341945) / 25001.8399941)|
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|
|=||(4233.46232052 - 0||-||5288.24258006)||/||27967.5666043|
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 -2.63 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