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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 Genuine Parts Co was -2.07. The lowest was -3.21. And the median was -2.44.
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 Co 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 * 1.0288||+||0.528 * 1.0017||+||0.404 * 1.0099||+||0.892 * 0.983||+||0.115 * 1.0905|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9977||+||4.679 * -0.0621||-||0.327 * 1.0388|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,031 Mil.|
Revenue was 3899.638 + 3718.267 + 3681.79 + 3921.802 = $15,221 Mil.
Gross Profit was 1165.452 + 1104.471 + 1095.478 + 1169.225 = $4,535 Mil.
Total Current Assets was $5,866 Mil.
Total Assets was $8,634 Mil.
Property, Plant and Equipment(Net PPE) was $685 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $3,272 Mil.
Total Current Liabilities was $4,406 Mil.
Long-Term Debt was $250 Mil.
Net Income was 191.369 + 158.025 + 161.273 + 188.016 = $699 Mil.
Non Operating Income was 0 + 0 + -0.733 + 0 = $-1 Mil.
Cash Flow from Operations was 395.447 + 135.045 + 263.386 + 441.879 = $1,236 Mil.
|Accounts Receivable was $2,008 Mil.
Revenue was 3940.401 + 3736.051 + 3822.454 + 3985.909 = $15,485 Mil.
Gross Profit was 1178.33 + 1112.819 + 1146.541 + 1183.422 = $4,621 Mil.
Total Current Assets was $5,764 Mil.
Total Assets was $8,414 Mil.
Property, Plant and Equipment(Net PPE) was $641 Mil.
Depreciation, Depletion and Amortization(DDA) was $146 Mil.
Selling, General & Admin. Expense(SGA) was $3,336 Mil.
Total Current Liabilities was $3,868 Mil.
Long-Term Debt was $500 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)|
|=||(2031.094 / 15221.497)||/||(2008.445 / 15484.815)|
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)|
|=||(4621.112 / 15484.815)||/||(4534.626 / 15221.497)|
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 - (5866.142 + 685.385) / 8634.109)||/||(1 - (5763.52 + 640.534) / 8413.633)|
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))|
|=||(146.16 / (146.16 + 640.534))||/||(140.753 / (140.753 + 685.385))|
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)|
|=||(3271.886 / 15221.497)||/||(3336.188 / 15484.815)|
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)|
|=||((250 + 4406.17) / 8634.109)||/||((500 + 3867.622) / 8413.633)|
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|
|=||(698.683 - -0.733||-||1235.757)||/||8634.109|
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 Co has a M-score of -2.76 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 Co Annual Data
Genuine Parts Co Quarterly Data