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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.
Genuine Parts Company has a M-score of -2.67 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Genuine Parts Company was -2.15. The lowest was -2.99. And the median was -2.46.
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 Genuine Parts Company 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 * 1.0329||+||0.528 * 0.9685||+||0.404 * 1.116||+||0.892 * 1.0818||+||0.115 * 0.8883|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0538||+||4.679 * -0.0501||-||0.327 * 1.1924|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $1,665 Mil.|
Revenue was 3517.801 + 3685.243 + 3675.997 + 3198.802 = $14,078 Mil.
Gross Profit was 1092.141 + 1100.923 + 1105.108 + 921.748 = $4,220 Mil.
Total Current Assets was $5,221 Mil.
Total Assets was $7,680 Mil.
Property, Plant and Equipment(Net PPE) was $670 Mil.
Depreciation, Depletion and Amortization(DDA) was $134 Mil.
Selling, General & Admin. Expense(SGA) was $3,019 Mil.
Total Current Liabilities was $3,183 Mil.
Long-Term Debt was $500 Mil.
Net Income was 150.467 + 173.746 + 216.357 + 144.389 = $685 Mil.
Non Operating Income was 13.039 + 0 + 0 + 0 = $13 Mil.
Cash Flow from Operations was 219.246 + 370.407 + 350.7 + 116.378 = $1,057 Mil.
|Accounts Receivable was $1,490 Mil.
Revenue was 3118.966 + 3375.778 + 3337.836 + 3181.288 = $13,014 Mil.
Gross Profit was 910.658 + 976.036 + 972.286 + 919.111 = $3,778 Mil.
Total Current Assets was $4,820 Mil.
Total Assets was $6,807 Mil.
Property, Plant and Equipment(Net PPE) was $566 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $2,648 Mil.
Total Current Liabilities was $2,488 Mil.
Long-Term Debt was $250 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)|
|=||(1664.819 / 14077.843)||/||(1490.028 / 13013.868)|
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)|
|=||(1100.923 / 13013.868)||/||(1092.141 / 14077.843)|
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 - (5221.491 + 670.061) / 7680.297)||/||(1 - (4820.131 + 566.365) / 6807.061)|
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))|
|=||(98.383 / (98.383 + 566.365))||/||(133.957 / (133.957 + 670.061))|
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)|
|=||(3019.036 / 14077.843)||/||(2648.43 / 13013.868)|
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)|
|=||((500 + 3183.044) / 7680.297)||/||((250 + 2487.638) / 6807.061)|
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|
|=||(684.959 - 13.039||-||1056.731)||/||7680.297|
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.
Genuine Parts Company has a M-score of -2.67 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
Genuine Parts Company Annual Data
Genuine Parts Company Quarterly Data