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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 FMC Technologies Inc was -1.70. The lowest was -3.13. And the median was -2.35.
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 FMC Technologies Inc 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 * 1.0728||+||0.528 * 1.1046||+||0.404 * 0.9627||+||0.892 * 0.7521||+||0.115 * 0.8824|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0714||+||4.679 * -0.0943||-||0.327 * 0.9473|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,413 Mil.|
Revenue was 1208.7 + 1427.3 + 1545 + 1695.2 = $5,876 Mil.
Gross Profit was 261.9 + 286 + 371.1 + 398.2 = $1,317 Mil.
Total Current Assets was $3,838 Mil.
Total Assets was $6,313 Mil.
Property, Plant and Equipment(Net PPE) was $1,341 Mil.
Depreciation, Depletion and Amortization(DDA) was $257 Mil.
Selling, General & Admin. Expense(SGA) was $598 Mil.
Total Current Liabilities was $2,047 Mil.
Long-Term Debt was $1,218 Mil.
Net Income was 19.8 + 55.6 + 82 + 107.9 = $265 Mil.
Non Operating Income was -11.3 + 34.1 + -12.7 + -15.1 = $-5 Mil.
Cash Flow from Operations was 109 + 430.3 + 266.4 + 60.1 = $866 Mil.
|Accounts Receivable was $1,752 Mil.
Revenue was 1695.2 + 2156.2 + 1976.7 + 1985.3 = $7,813 Mil.
Gross Profit was 412.6 + 547.3 + 497.1 + 477.7 = $1,935 Mil.
Total Current Assets was $4,243 Mil.
Total Assets was $6,971 Mil.
Property, Plant and Equipment(Net PPE) was $1,428 Mil.
Depreciation, Depletion and Amortization(DDA) was $236 Mil.
Selling, General & Admin. Expense(SGA) was $742 Mil.
Total Current Liabilities was $2,505 Mil.
Long-Term Debt was $1,302 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)|
|=||(1413.3 / 5876.2)||/||(1751.7 / 7813.4)|
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)|
|=||(286 / 7813.4)||/||(261.9 / 5876.2)|
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 - (3837.9 + 1340.9) / 6313.2)||/||(1 - (4242.5 + 1427.5) / 6971.2)|
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))|
|=||(236.2 / (236.2 + 1427.5))||/||(257.1 / (257.1 + 1340.9))|
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)|
|=||(597.7 / 5876.2)||/||(741.8 / 7813.4)|
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)|
|=||((1218.4 + 2046.9) / 6313.2)||/||((1301.6 + 2504.7) / 6971.2)|
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|
|=||(265.3 - -5||-||865.8)||/||6313.2|
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.
FMC Technologies Inc has a M-score of -3.04 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
FMC Technologies Inc Annual Data
FMC Technologies Inc Quarterly Data