Switch to:
GuruFocus has detected 5 Warning Signs with 3M Co $FRA:MMM.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
3M Co (FRA:MMM)
Beneish M-Score
-2.68 (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 -2.67 suggests that the company is not a manipulator.

FRA:MMM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.11   Max: -2.4
Current: -2.68

-3.11
-2.4

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.40. The lowest was -3.11. And the median was -2.69.


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 * 1.0971+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
=-2.67

* 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

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)
=(4163.42781306 / 27288.8574081) / (3813.45818415 / 27421.5101394)
=0.15256878 / 0.13906813
=1.0971

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)
=(13485.7037283 / 27421.5101394) / (13654.5681973 / 27288.8574081)
=0.49179289 / 0.50037156
=0.9829

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 - (11115.7455683 + 8072.8031093) / 31193.4780548) / (1 - (10085.3759295 + 7816.94666299) / 30187.2762324)
=0.38485383 / 0.406958
=0.9457

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
=27288.8574081 / 27421.5101394
=0.9952

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))
=0.14263901 / 0.14211652
=1.0037

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)
=0.20304202 / 0.2042685
=0.994

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)
=0.51486051 / 0.48404951
=1.0637

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
=(4572.98661402 - 0 - 6069.22848463) / 31193.4780548
=-0.048

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.


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 local exchange's currency.

3M Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01560.921.11160.96470.96321.03991.01450.96671.03031.0631
GMI 1.02011.01880.98790.98981.02390.98850.99420.98990.98220.9828
AQI 1.10771.07720.96141.0191.04760.94591.0350.92051.21920.9457
SGI 0.96851.11260.84831.27061.11651.01260.98891.14521.07691.027
DEPI 1.10280.97651.01121.06370.96041.0420.97420.96150.98640.9775
SGAI 0.92771.01251.02240.96841.0140.97931.01340.98311.00450.9939
LVGI 0.96611.12080.86420.92730.92051.04361.07241.15161.18691.0637
TATA -0.0061-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0535-0.0483-0.049
M-score -2.43-2.65-2.79-2.40-2.51-2.58-2.66-2.72-2.59-2.68

3M Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.05621.06111.10151.01780.97810.98010.93370.9951.02661.0971
GMI 0.98420.99030.98680.98210.9790.98220.98450.98790.9930.9829
AQI 1.00130.92050.88620.85641.12011.21921.27421.30240.97830.9457
SGI 1.00721.04341.11221.14421.14881.1321.05911.02341.00220.9952
DEPI 1.01541.04121.09441.02460.9860.94450.89130.92030.94281.0037
SGAI 0.98480.98280.98130.98690.99821.0051.00041.00381.0020.994
LVGI 1.20821.15161.06611.18411.221.18691.29651.15581.06661.0637
TATA -0.0455-0.0522-0.0458-0.0377-0.036-0.0479-0.0521-0.0508-0.0557-0.048
M-score -2.71-2.71-2.56-2.63-2.57-2.59-2.74-2.65-2.76-2.67
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK