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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 * 1.0156||+||0.528 * 1.0103||+||0.404 * 0.9622||+||0.892 * 1.0654||+||0.115 * 0.9634|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9914||+||4.679 * -0.019||-||0.327 * 1.0521|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,978 Mil.|
Revenue was 3736.051 + 3822.454 + 3985.909 + 3908.387 = $15,453 Mil.
Gross Profit was 1112.819 + 1146.541 + 1183.422 + 1179.168 = $4,622 Mil.
Total Current Assets was $5,635 Mil.
Total Assets was $8,238 Mil.
Property, Plant and Equipment(Net PPE) was $646 Mil.
Depreciation, Depletion and Amortization(DDA) was $147 Mil.
Selling, General & Admin. Expense(SGA) was $3,336 Mil.
Total Current Liabilities was $3,759 Mil.
Long-Term Debt was $500 Mil.
Net Income was 161.01 + 165.559 + 190.516 + 197.727 = $715 Mil.
Non Operating Income was 0 + 18.601 + 0 + 0 = $19 Mil.
Cash Flow from Operations was 122.512 + 200.822 + 222.221 + 307.323 = $853 Mil.
|Accounts Receivable was $1,828 Mil.
Revenue was 3624.897 + 3517.801 + 3685.243 + 3675.997 = $14,504 Mil.
Gross Profit was 1084.63 + 1092.141 + 1100.923 + 1105.108 = $4,383 Mil.
Total Current Assets was $5,346 Mil.
Total Assets was $7,982 Mil.
Property, Plant and Equipment(Net PPE) was $665 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $3,158 Mil.
Total Current Liabilities was $3,423 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)|
|=||(1978.233 / 15452.801)||/||(1828.309 / 14503.938)|
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)|
|=||(1146.541 / 14503.938)||/||(1112.819 / 15452.801)|
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 - (5634.699 + 646.116) / 8238.355)||/||(1 - (5346.431 + 664.689) / 7982.374)|
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))|
|=||(144.814 / (144.814 + 664.689))||/||(147.341 / (147.341 + 646.116))|
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)|
|=||(3335.783 / 15452.801)||/||(3158.218 / 14503.938)|
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 + 3759.361) / 8238.355)||/||((500 + 3422.738) / 7982.374)|
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|
|=||(714.812 - 18.601||-||852.878)||/||8238.355|
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 -2.53 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