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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 * 1.1593||+||0.528 * 0.9865||+||0.404 * 1.1242||+||0.892 * 1.0505||+||0.115 * 1.1562|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0063||+||4.679 * 0.0257||-||0.327 * 1.476|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $524 Mil.|
Revenue was 1127.184 + 1386.358 + 1195.567 + 1022.371 = $4,731 Mil.
Gross Profit was 458.808 + 464.122 + 449.789 + 444.592 = $1,817 Mil.
Total Current Assets was $1,526 Mil.
Total Assets was $4,055 Mil.
Property, Plant and Equipment(Net PPE) was $1,288 Mil.
Depreciation, Depletion and Amortization(DDA) was $256 Mil.
Selling, General & Admin. Expense(SGA) was $897 Mil.
Total Current Liabilities was $596 Mil.
Long-Term Debt was $509 Mil.
Net Income was 155.479 + 134.579 + 141.056 + 155.151 = $586 Mil.
Non Operating Income was -5.065 + -5.545 + -7.307 + 6.259 = $-12 Mil.
Cash Flow from Operations was 225.557 + 142.408 + -104.335 + 230.148 = $494 Mil.
|Accounts Receivable was $431 Mil.
Revenue was 1103.072 + 1386.67 + 1047.177 + 967.072 = $4,504 Mil.
Gross Profit was 457.432 + 464.047 + 377.459 + 407.618 = $1,707 Mil.
Total Current Assets was $2,145 Mil.
Total Assets was $4,363 Mil.
Property, Plant and Equipment(Net PPE) was $1,030 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $849 Mil.
Total Current Liabilities was $554 Mil.
Long-Term Debt was $251 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)|
|=||(524.327 / 4731.48)||/||(430.547 / 4503.991)|
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)|
|=||(464.122 / 4503.991)||/||(458.808 / 4731.48)|
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 - (1526.05 + 1287.64) / 4054.685)||/||(1 - (2145.397 + 1029.551) / 4362.729)|
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))|
|=||(244.598 / (244.598 + 1029.551))||/||(256.364 / (256.364 + 1287.64))|
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)|
|=||(897.278 / 4731.48)||/||(848.762 / 4503.991)|
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)|
|=||((509.004 + 595.888) / 4054.685)||/||((251.19 + 554.257) / 4362.729)|
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|
|=||(586.265 - -11.658||-||493.778)||/||4054.685|
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 -2.26 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