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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 Goodyear Tire & Rubber Co was -1.60. The lowest was -3.22. And the median was -2.60.
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 Goodyear Tire & Rubber 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 * 0.9406||+||0.528 * 0.9032||+||0.404 * 2.0014||+||0.892 * 0.9282||+||0.115 * 0.9671|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0625||+||4.679 * 0.1377||-||0.327 * 0.9475|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,126 Mil.|
Revenue was 4356 + 4657 + 4656 + 4469 = $18,138 Mil.
Gross Profit was 1016 + 1141 + 1124 + 951 = $4,232 Mil.
Total Current Assets was $7,724 Mil.
Total Assets was $18,109 Mil.
Property, Plant and Equipment(Net PPE) was $7,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $732 Mil.
Selling, General & Admin. Expense(SGA) was $2,720 Mil.
Total Current Liabilities was $4,736 Mil.
Long-Term Debt was $6,216 Mil.
Net Income was 2129 + 161 + 213 + -51 = $2,452 Mil.
Non Operating Income was -80 + -85 + -8 + -209 = $-382 Mil.
Cash Flow from Operations was 1279 + 195 + 409 + -1543 = $340 Mil.
|Accounts Receivable was $2,435 Mil.
Revenue was 4791 + 5002 + 4894 + 4853 = $19,540 Mil.
Gross Profit was 1101 + 1056 + 1048 + 913 = $4,118 Mil.
Total Current Assets was $8,644 Mil.
Total Assets was $17,527 Mil.
Property, Plant and Equipment(Net PPE) was $7,320 Mil.
Depreciation, Depletion and Amortization(DDA) was $722 Mil.
Selling, General & Admin. Expense(SGA) was $2,758 Mil.
Total Current Liabilities was $5,025 Mil.
Long-Term Debt was $6,162 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)|
|=||(2126 / 18138)||/||(2435 / 19540)|
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)|
|=||(1141 / 19540)||/||(1016 / 18138)|
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 - (7724 + 7153) / 18109)||/||(1 - (8644 + 7320) / 17527)|
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))|
|=||(722 / (722 + 7320))||/||(732 / (732 + 7153))|
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)|
|=||(2720 / 18138)||/||(2758 / 19540)|
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)|
|=||((6216 + 4736) / 18109)||/||((6162 + 5025) / 17527)|
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|
|=||(2452 - -382||-||340)||/||18109|
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.
Goodyear Tire & Rubber Co has a M-score of -1.60 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
Goodyear Tire & Rubber Co Annual Data
Goodyear Tire & Rubber Co Quarterly Data