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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 -2.34. 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 * 1.0971||+||0.528 * 0.9829||+||0.404 * 0.9457||+||0.892 * 0.9952||+||0.115 * 1.0037|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.994||+||4.679 * -0.048||-||0.327 * 1.0637|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was €4,163 Mil.|
Revenue was 6947.57796948 + 6868.92987615 + 6819.15272339 + 6653.19683908 = €27,289 Mil.
Gross Profit was 3424.96919139 + 3441.14764323 + 3438.05624778 + 3350.39511494 = €13,655 Mil.
Total Current Assets was €11,116 Mil.
Total Assets was €31,193 Mil.
Property, Plant and Equipment(Net PPE) was €8,073 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,337 Mil.
Selling, General & Admin. Expense(SGA) was €5,541 Mil.
Total Current Liabilities was €5,895 Mil.
Long-Term Debt was €10,165 Mil.
Net Income was 1094.89051095 + 1184.17535418 + 1148.98540406 + 1144.93534483 = €4,573 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 2094.03734951 + 1700.08019246 + 1143.64542542 + 1131.46551724 = €6,069 Mil.
|Accounts Receivable was €3,813 Mil.
Revenue was 6699.71541357 + 6871.60295821 + 6848.43624699 + 7001.75552065 = €27,422 Mil.
Gross Profit was 3186.45001377 + 3417.08990466 + 3410.85271318 + 3471.31109674 = €13,486 Mil.
Total Current Assets was €10,085 Mil.
Total Assets was €30,187 Mil.
Property, Plant and Equipment(Net PPE) was €7,817 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,301 Mil.
Selling, General & Admin. Expense(SGA) was €5,601 Mil.
Total Current Liabilities was €6,534 Mil.
Long-Term Debt was €8,078 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)|
|=||(4163.42781306 / 27288.8574081)||/||(3813.45818415 / 27421.5101394)|
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)|
|=||(13485.7037283 / 27421.5101394)||/||(13654.5681973 / 27288.8574081)|
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 - (11115.7455683 + 8072.8031093) / 31193.4780548)||/||(1 - (10085.3759295 + 7816.94666299) / 30187.2762324)|
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))|
|=||(1300.50419986 / (1300.50419986 + 7816.94666299))||/||(1337.33621806 / (1337.33621806 + 8072.8031093))|
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)|
|=||(5540.78473692 / 27288.8574081)||/||(5601.35084409 / 27421.5101394)|
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)|
|=||((10164.9445445 + 5895.34553038) / 31193.4780548)||/||((8077.66455522 + 6534.47167906) / 30187.2762324)|
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|
|=||(4572.98661402 - 0||-||6069.22848463)||/||31193.4780548|
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 -2.67 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