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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 Jarden Corp was 0.10. The lowest was -3.30. And the median was -2.52.
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 Jarden 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 * 0.9483||+||0.528 * 0.9049||+||0.404 * 1.0203||+||0.892 * 1.1266||+||0.115 * 0.8873|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1447||+||4.679 * -0.0304||-||0.327 * 0.9981|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,278 Mil.|
Revenue was 2438 + 2142.2 + 1975.1 + 1731.8 = $8,287 Mil.
Gross Profit was 843.2 + 673.3 + 602 + 514.4 = $2,633 Mil.
Total Current Assets was $4,318 Mil.
Total Assets was $10,799 Mil.
Property, Plant and Equipment(Net PPE) was $850 Mil.
Depreciation, Depletion and Amortization(DDA) was $191 Mil.
Selling, General & Admin. Expense(SGA) was $1,960 Mil.
Total Current Liabilities was $2,077 Mil.
Long-Term Debt was $4,464 Mil.
Net Income was 78.1 + 108.6 + 52.1 + 3.7 = $243 Mil.
Non Operating Income was -2.3 + 0 + -54.4 + 0 = $-57 Mil.
Cash Flow from Operations was 676.9 + 124.5 + 83.7 + -258.1 = $627 Mil.
|Accounts Receivable was $1,196 Mil.
Revenue was 2215.6 + 1800.8 + 1758.8 + 1580.7 = $7,356 Mil.
Gross Profit was 634.5 + 523.2 + 513.5 + 443.5 = $2,115 Mil.
Total Current Assets was $4,084 Mil.
Total Assets was $10,096 Mil.
Property, Plant and Equipment(Net PPE) was $853 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $1,520 Mil.
Total Current Liabilities was $2,039 Mil.
Long-Term Debt was $4,087 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)|
|=||(1277.9 / 8287.1)||/||(1196.1 / 7355.9)|
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)|
|=||(673.3 / 7355.9)||/||(843.2 / 8287.1)|
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 - (4318 + 849.9) / 10799.3)||/||(1 - (4083.5 + 852.6) / 10096.1)|
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))|
|=||(165.9 / (165.9 + 852.6))||/||(191.1 / (191.1 + 849.9))|
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)|
|=||(1960 / 8287.1)||/||(1519.8 / 7355.9)|
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)|
|=||((4464 + 2077.2) / 10799.3)||/||((4087.3 + 2039.4) / 10096.1)|
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|
|=||(242.5 - -56.7||-||627)||/||10799.3|
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.
Jarden Corp has a M-score of -2.64 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
Jarden Corp Annual Data
Jarden Corp Quarterly Data