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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 -3.03. And the median was -2.29.
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 * 1.0445||+||0.528 * 0.8769||+||0.404 * 0.9128||+||0.892 * 1.1322||+||0.115 * 0.9552|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9506||+||4.679 * -0.029||-||0.327 * 0.9568|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,269 Mil.|
Revenue was 1976.7 + 1985.3 + 1824.4 + 2047.8 = $7,834 Mil.
Gross Profit was 497.1 + 477.5 + 420.9 + 487.5 = $1,883 Mil.
Total Current Assets was $4,403 Mil.
Total Assets was $7,034 Mil.
Property, Plant and Equipment(Net PPE) was $1,447 Mil.
Depreciation, Depletion and Amortization(DDA) was $230 Mil.
Selling, General & Admin. Expense(SGA) was $728 Mil.
Total Current Liabilities was $2,698 Mil.
Long-Term Debt was $1,337 Mil.
Net Income was 169.8 + 226.3 + 135.2 + 177.8 = $709 Mil.
Non Operating Income was -27.8 + 84 + -1.1 + 4.3 = $59 Mil.
Cash Flow from Operations was 247.5 + 184 + 51.8 + 370.2 = $854 Mil.
|Accounts Receivable was $1,919 Mil.
Revenue was 1724.5 + 1707.9 + 1646 + 1840.9 = $6,919 Mil.
Gross Profit was 370.7 + 357.8 + 338.8 + 391.1 = $1,458 Mil.
Total Current Assets was $3,915 Mil.
Total Assets was $6,425 Mil.
Property, Plant and Equipment(Net PPE) was $1,325 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $676 Mil.
Total Current Liabilities was $2,311 Mil.
Long-Term Debt was $1,541 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)|
|=||(2268.8 / 7834.2)||/||(1918.5 / 6919.3)|
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)|
|=||(477.5 / 6919.3)||/||(497.1 / 7834.2)|
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 - (4403.4 + 1447) / 7034.4)||/||(1 - (3915.3 + 1324.9) / 6424.9)|
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))|
|=||(199.9 / (199.9 + 1324.9))||/||(230.2 / (230.2 + 1447))|
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)|
|=||(728 / 7834.2)||/||(676.4 / 6919.3)|
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)|
|=||((1337 + 2698.1) / 7034.4)||/||((1540.9 + 2310.8) / 6424.9)|
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|
|=||(709.1 - 59.4||-||853.5)||/||7034.4|
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 -2.54 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