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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 -1.59. 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 * 0.961||+||0.528 * 0.904||+||0.404 * 1.8304||+||0.892 * 0.9011||+||0.115 * 0.989|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0441||+||4.679 * 0.0552||-||0.327 * 0.8584|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,616 Mil.|
Revenue was 4184 + 4172 + 4024 + 4356 = $16,736 Mil.
Gross Profit was 1184 + 1145 + 958 + 1016 = $4,303 Mil.
Total Current Assets was $7,922 Mil.
Total Assets was $17,515 Mil.
Property, Plant and Equipment(Net PPE) was $6,673 Mil.
Depreciation, Depletion and Amortization(DDA) was $701 Mil.
Selling, General & Admin. Expense(SGA) was $2,591 Mil.
Total Current Liabilities was $4,783 Mil.
Long-Term Debt was $5,591 Mil.
Net Income was 271 + 192 + 224 + 2129 = $2,816 Mil.
Non Operating Income was -25 + -67 + 107 + -80 = $-65 Mil.
Cash Flow from Operations was 361 + 536 + -262 + 1279 = $1,914 Mil.
|Accounts Receivable was $3,021 Mil.
Revenue was 4657 + 4656 + 4469 + 4791 = $18,573 Mil.
Gross Profit was 1141 + 1124 + 951 + 1101 = $4,317 Mil.
Total Current Assets was $8,047 Mil.
Total Assets was $16,656 Mil.
Property, Plant and Equipment(Net PPE) was $7,092 Mil.
Depreciation, Depletion and Amortization(DDA) was $736 Mil.
Selling, General & Admin. Expense(SGA) was $2,754 Mil.
Total Current Liabilities was $4,773 Mil.
Long-Term Debt was $6,719 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)|
|=||(2616 / 16736)||/||(3021 / 18573)|
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)|
|=||(1145 / 18573)||/||(1184 / 16736)|
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 - (7922 + 6673) / 17515)||/||(1 - (8047 + 7092) / 16656)|
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))|
|=||(736 / (736 + 7092))||/||(701 / (701 + 6673))|
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)|
|=||(2591 / 16736)||/||(2754 / 18573)|
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)|
|=||((5591 + 4783) / 17515)||/||((6719 + 4773) / 16656)|
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|
|=||(2816 - -65||-||1914)||/||17515|
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 -2.02 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