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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 Keurig Green Mountain Inc was -0.72. The lowest was -3.35. 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 Keurig Green Mountain 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 * 1.146||+||0.528 * 0.9792||+||0.404 * 0.8399||+||0.892 * 1.0685||+||0.115 * 1.082|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9628||+||4.679 * 0.0031||-||0.327 * 1.0318|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $643 Mil.|
Revenue was 1386.358 + 1195.567 + 1022.371 + 1103.072 = $4,707 Mil.
Gross Profit was 464.122 + 449.789 + 444.592 + 457.432 = $1,816 Mil.
Total Current Assets was $2,231 Mil.
Total Assets was $4,776 Mil.
Property, Plant and Equipment(Net PPE) was $1,223 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $879 Mil.
Total Current Liabilities was $805 Mil.
Long-Term Debt was $251 Mil.
Net Income was 134.579 + 141.056 + 155.151 + 162.084 = $593 Mil.
Non Operating Income was -5.545 + -7.307 + 6.259 + -4.569 = $-11 Mil.
Cash Flow from Operations was 142.408 + -104.335 + 230.148 + 320.944 = $589 Mil.
|Accounts Receivable was $525 Mil.
Revenue was 1386.67 + 1047.177 + 967.072 + 1004.792 = $4,406 Mil.
Gross Profit was 464.047 + 377.459 + 407.618 + 415.146 = $1,664 Mil.
Total Current Assets was $1,471 Mil.
Total Assets was $3,680 Mil.
Property, Plant and Equipment(Net PPE) was $996 Mil.
Depreciation, Depletion and Amortization(DDA) was $233 Mil.
Selling, General & Admin. Expense(SGA) was $855 Mil.
Total Current Liabilities was $546 Mil.
Long-Term Debt was $243 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)|
|=||(643.029 / 4707.368)||/||(525.148 / 4405.711)|
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)|
|=||(449.789 / 4405.711)||/||(464.122 / 4707.368)|
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 - (2230.817 + 1222.569) / 4775.865)||/||(1 - (1470.6 + 996.246) / 3680.108)|
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))|
|=||(232.996 / (232.996 + 996.246))||/||(259.65 / (259.65 + 1222.569))|
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)|
|=||(879.393 / 4707.368)||/||(854.858 / 4405.711)|
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)|
|=||((251.077 + 805.438) / 4775.865)||/||((243.469 + 545.542) / 3680.108)|
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|
|=||(592.87 - -11.162||-||589.165)||/||4775.865|
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.
Keurig Green Mountain Inc has a M-score of -2.34 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
Keurig Green Mountain Inc Annual Data
Keurig Green Mountain Inc Quarterly Data