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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 IDEX Corp was -2.33. The lowest was -3.19. And the median was -2.57.
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 IDEX 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 * 1.0372||+||0.528 * 1.0055||+||0.404 * 1.0944||+||0.892 * 1.0184||+||0.115 * 0.9889|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9996||+||4.679 * -0.0328||-||0.327 * 1.0502|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $287 Mil.|
Revenue was 530.356 + 549.696 + 502.572 + 499.798 = $2,082 Mil.
Gross Profit was 230.889 + 244.058 + 223.335 + 223.399 = $922 Mil.
Total Current Assets was $857 Mil.
Total Assets was $3,262 Mil.
Property, Plant and Equipment(Net PPE) was $261 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $490 Mil.
Total Current Liabilities was $305 Mil.
Long-Term Debt was $1,100 Mil.
Net Income was 69.873 + 75.759 + 68.13 + 67.763 = $282 Mil.
Non Operating Income was 2.364 + 1.874 + 0.744 + 0.654 = $6 Mil.
Cash Flow from Operations was 125.481 + 88.478 + 70.365 + 98.54 = $383 Mil.
|Accounts Receivable was $272 Mil.
Revenue was 503.791 + 514.881 + 502.198 + 523.899 = $2,045 Mil.
Gross Profit was 223.26 + 231.615 + 226.041 + 229.117 = $910 Mil.
Total Current Assets was $906 Mil.
Total Assets was $2,870 Mil.
Property, Plant and Equipment(Net PPE) was $240 Mil.
Depreciation, Depletion and Amortization(DDA) was $77 Mil.
Selling, General & Admin. Expense(SGA) was $482 Mil.
Total Current Liabilities was $324 Mil.
Long-Term Debt was $853 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)|
|=||(287.329 / 2082.422)||/||(272.008 / 2044.769)|
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)|
|=||(910.033 / 2044.769)||/||(921.681 / 2082.422)|
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 - (857.353 + 261.092) / 3262.464)||/||(1 - (906.399 + 240.27) / 2870.362)|
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))|
|=||(76.599 / (76.599 + 240.27))||/||(84.47 / (84.47 + 261.092))|
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)|
|=||(490.449 / 2082.422)||/||(481.775 / 2044.769)|
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)|
|=||((1099.601 + 305.357) / 3262.464)||/||((852.78 + 324.186) / 2870.362)|
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|
|=||(281.525 - 5.636||-||382.864)||/||3262.464|
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.
IDEX Corp has a M-score of -2.56 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
IDEX Corp Annual Data
IDEX Corp Quarterly Data