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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 -1.49. The lowest was -3.27. And the median was -2.61.
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 * 0.9439||+||0.528 * 0.9423||+||0.404 * 1.0682||+||0.892 * 0.9219||+||0.115 * 0.9976|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0408||+||4.679 * -0.0107||-||0.327 * 0.9518|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,769 Mil.|
Revenue was 3741 + 3847 + 3879 + 3691 = $15,158 Mil.
Gross Profit was 1019 + 1111 + 1066 + 990 = $4,186 Mil.
Total Current Assets was $5,718 Mil.
Total Assets was $16,511 Mil.
Property, Plant and Equipment(Net PPE) was $7,040 Mil.
Depreciation, Depletion and Amortization(DDA) was $727 Mil.
Selling, General & Admin. Expense(SGA) was $2,558 Mil.
Total Current Liabilities was $4,817 Mil.
Long-Term Debt was $4,798 Mil.
Net Income was 561 + 317 + 202 + 184 = $1,264 Mil.
Non Operating Income was 10 + 19 + -72 + -21 = $-64 Mil.
Cash Flow from Operations was 1267 + 357 + 261 + -381 = $1,504 Mil.
|Accounts Receivable was $2,033 Mil.
Revenue was 4063 + 4184 + 4172 + 4024 = $16,443 Mil.
Gross Profit was 992 + 1184 + 1145 + 958 = $4,279 Mil.
Total Current Assets was $6,126 Mil.
Total Assets was $16,391 Mil.
Property, Plant and Equipment(Net PPE) was $6,777 Mil.
Depreciation, Depletion and Amortization(DDA) was $698 Mil.
Selling, General & Admin. Expense(SGA) was $2,666 Mil.
Total Current Liabilities was $4,955 Mil.
Long-Term Debt was $5,074 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)|
|=||(1769 / 15158)||/||(2033 / 16443)|
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)|
|=||(4279 / 16443)||/||(4186 / 15158)|
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 - (5718 + 7040) / 16511)||/||(1 - (6126 + 6777) / 16391)|
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))|
|=||(698 / (698 + 6777))||/||(727 / (727 + 7040))|
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)|
|=||(2558 / 15158)||/||(2666 / 16443)|
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)|
|=||((4798 + 4817) / 16511)||/||((5074 + 4955) / 16391)|
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|
|=||(1264 - -64||-||1504)||/||16511|
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 -2.65 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
Goodyear Tire & Rubber Co Annual Data
Goodyear Tire & Rubber Co Quarterly Data