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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 90.02. The lowest was -4.16. 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 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 * 1.5097||+||0.528 * 0.961||+||0.404 * 1.2173||+||0.892 * 0.9635||+||0.115 * 1.2921|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0994||+||4.679 * -0.0679||-||0.327 * 1.0601|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,632 Mil.|
Revenue was 2638 + 2740 + 2589 + 2951 = $10,918 Mil.
Gross Profit was 473 + 549 + 450 + 449 = $1,921 Mil.
Total Current Assets was $4,251 Mil.
Total Assets was $10,236 Mil.
Property, Plant and Equipment(Net PPE) was $4,380 Mil.
Depreciation, Depletion and Amortization(DDA) was $407 Mil.
Selling, General & Admin. Expense(SGA) was $1,001 Mil.
Total Current Liabilities was $2,065 Mil.
Long-Term Debt was $4,716 Mil.
Net Income was 55 + 29 + 5 + -38 = $51 Mil.
Non Operating Income was -8 + -18 + -2 + -30 = $-58 Mil.
Cash Flow from Operations was 206 + 147 + 34 + 417 = $804 Mil.
|Accounts Receivable was $1,122 Mil.
Revenue was 2884 + 2988 + 2755 + 2705 = $11,332 Mil.
Gross Profit was 515 + 505 + 450 + 446 = $1,916 Mil.
Total Current Assets was $4,494 Mil.
Total Assets was $9,409 Mil.
Property, Plant and Equipment(Net PPE) was $3,703 Mil.
Depreciation, Depletion and Amortization(DDA) was $457 Mil.
Selling, General & Admin. Expense(SGA) was $945 Mil.
Total Current Liabilities was $2,122 Mil.
Long-Term Debt was $3,758 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)|
|=||(1632 / 10918)||/||(1122 / 11332)|
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)|
|=||(549 / 11332)||/||(473 / 10918)|
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 - (4251 + 4380) / 10236)||/||(1 - (4494 + 3703) / 9409)|
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))|
|=||(457 / (457 + 3703))||/||(407 / (407 + 4380))|
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)|
|=||(1001 / 10918)||/||(945 / 11332)|
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)|
|=||((4716 + 2065) / 10236)||/||((3758 + 2122) / 9409)|
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|
|=||(51 - -58||-||804)||/||10236|
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 -2.30 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