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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 -2.34.
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 * 1.1246||+||0.528 * 1.039||+||0.404 * 1.2346||+||0.892 * 1.0262||+||0.115 * 1.1352|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0023||+||4.679 * 0.0138||-||0.327 * 1.1592|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $441 Mil.|
Revenue was 969.525 + 1127.184 + 1386.358 + 1195.567 = $4,679 Mil.
Gross Profit was 349.26 + 458.808 + 464.122 + 449.789 = $1,722 Mil.
Total Current Assets was $1,398 Mil.
Total Assets was $3,994 Mil.
Property, Plant and Equipment(Net PPE) was $1,324 Mil.
Depreciation, Depletion and Amortization(DDA) was $256 Mil.
Selling, General & Admin. Expense(SGA) was $872 Mil.
Total Current Liabilities was $525 Mil.
Long-Term Debt was $410 Mil.
Net Income was 113.621 + 155.479 + 134.579 + 141.056 = $545 Mil.
Non Operating Income was 1.889 + -5.065 + -5.545 + -7.307 = $-16 Mil.
Cash Flow from Operations was 242.137 + 225.557 + 142.408 + -104.335 = $506 Mil.
|Accounts Receivable was $382 Mil.
Revenue was 1022.371 + 1103.072 + 1386.67 + 1047.177 = $4,559 Mil.
Gross Profit was 444.592 + 457.432 + 464.047 + 377.459 = $1,744 Mil.
Total Current Assets was $2,340 Mil.
Total Assets was $4,644 Mil.
Property, Plant and Equipment(Net PPE) was $1,106 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $848 Mil.
Total Current Liabilities was $683 Mil.
Long-Term Debt was $254 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)|
|=||(441.273 / 4678.634)||/||(382.382 / 4559.29)|
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)|
|=||(458.808 / 4559.29)||/||(349.26 / 4678.634)|
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 - (1398.026 + 1324.408) / 3994.487)||/||(1 - (2340.25 + 1105.648) / 4643.664)|
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))|
|=||(249.042 / (249.042 + 1105.648))||/||(255.928 / (255.928 + 1324.408))|
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)|
|=||(871.934 / 4678.634)||/||(847.733 / 4559.29)|
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)|
|=||((410.024 + 524.723) / 3994.487)||/||((254.163 + 683.276) / 4643.664)|
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|
|=||(544.735 - -16.028||-||505.767)||/||3994.487|
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 -2.20 signals that the company is likely to 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