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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 Huntsman Corp was -1.95. The lowest was -3.44. And the median was -2.74.
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 Huntsman Corp 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 * 1.0562||+||0.528 * 1.0327||+||0.404 * 0.9868||+||0.892 * 0.9377||+||0.115 * 0.8853|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0187||+||4.679 * -0.0833||-||0.327 * 0.9659|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,435 Mil.|
Revenue was 2395 + 2363 + 2544 + 2355 = $9,657 Mil.
Gross Profit was 407 + 398 + 457 + 416 = $1,678 Mil.
Total Current Assets was $3,555 Mil.
Total Assets was $9,189 Mil.
Property, Plant and Equipment(Net PPE) was $4,212 Mil.
Depreciation, Depletion and Amortization(DDA) was $432 Mil.
Selling, General & Admin. Expense(SGA) was $938 Mil.
Total Current Liabilities was $1,778 Mil.
Long-Term Debt was $4,136 Mil.
Net Income was 128 + 55 + 87 + 56 = $326 Mil.
Non Operating Income was 2 + -2 + 1 + 2 = $3 Mil.
Cash Flow from Operations was 240 + 405 + 355 + 88 = $1,088 Mil.
|Accounts Receivable was $1,449 Mil.
Revenue was 2332 + 2638 + 2740 + 2589 = $10,299 Mil.
Gross Profit was 376 + 473 + 549 + 450 = $1,848 Mil.
Total Current Assets was $3,834 Mil.
Total Assets was $9,820 Mil.
Property, Plant and Equipment(Net PPE) was $4,446 Mil.
Depreciation, Depletion and Amortization(DDA) was $399 Mil.
Selling, General & Admin. Expense(SGA) was $982 Mil.
Total Current Liabilities was $1,917 Mil.
Long-Term Debt was $4,626 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)|
|=||(1435 / 9657)||/||(1449 / 10299)|
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)|
|=||(1848 / 10299)||/||(1678 / 9657)|
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 - (3555 + 4212) / 9189)||/||(1 - (3834 + 4446) / 9820)|
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))|
|=||(399 / (399 + 4446))||/||(432 / (432 + 4212))|
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)|
|=||(938 / 9657)||/||(982 / 10299)|
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)|
|=||((4136 + 1778) / 9189)||/||((4626 + 1917) / 9820)|
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|
|=||(326 - 3||-||1088)||/||9189|
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.
Huntsman Corp has a M-score of -2.87 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
Huntsman Corp Annual Data
Huntsman Corp Quarterly Data