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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 -3.55. And the median was -2.36.
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 * 0.5836||+||0.528 * 1.1309||+||0.404 * 1.0678||+||0.892 * 0.7086||+||0.115 * 0.8139|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1925||+||4.679 * -0.1059||-||0.327 * 0.9146|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $782 Mil.|
Revenue was 1150.3 + 1208.7 + 1427.3 + 1545 = $5,331 Mil.
Gross Profit was 243.5 + 261.9 + 286 + 371.1 = $1,163 Mil.
Total Current Assets was $3,705 Mil.
Total Assets was $6,161 Mil.
Property, Plant and Equipment(Net PPE) was $1,329 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $607 Mil.
Total Current Liabilities was $1,788 Mil.
Long-Term Debt was $1,299 Mil.
Net Income was 2.2 + 19.8 + 55.6 + 82 = $160 Mil.
Non Operating Income was 0 + -11.3 + 34.1 + -12.7 = $10 Mil.
Cash Flow from Operations was -4 + 109 + 430.3 + 266.4 = $802 Mil.
|Accounts Receivable was $1,892 Mil.
Revenue was 1695.2 + 1695.2 + 2156.2 + 1976.7 = $7,523 Mil.
Gross Profit was 398.2 + 412.6 + 547.3 + 497.1 = $1,855 Mil.
Total Current Assets was $4,232 Mil.
Total Assets was $6,894 Mil.
Property, Plant and Equipment(Net PPE) was $1,482 Mil.
Depreciation, Depletion and Amortization(DDA) was $231 Mil.
Selling, General & Admin. Expense(SGA) was $718 Mil.
Total Current Liabilities was $2,501 Mil.
Long-Term Debt was $1,275 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)|
|=||(782.2 / 5331.3)||/||(1891.5 / 7523.3)|
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)|
|=||(1855.2 / 7523.3)||/||(1162.5 / 5331.3)|
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 - (3705.2 + 1328.8) / 6160.8)||/||(1 - (4231.6 + 1481.5) / 6893.9)|
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))|
|=||(231.2 / (231.2 + 1481.5))||/||(264.2 / (264.2 + 1328.8))|
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)|
|=||(606.5 / 5331.3)||/||(717.7 / 7523.3)|
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)|
|=||((1298.7 + 1787.7) / 6160.8)||/||((1275.2 + 2501.1) / 6893.9)|
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|
|=||(159.6 - 10.1||-||801.7)||/||6160.8|
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 -3.55 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