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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 Lafarge SA was -2.02. The lowest was -3.40. And the median was -2.62.
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 Lafarge SA 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 * 0.8447||+||0.528 * 1.0081||+||0.404 * 0.878||+||0.892 * 0.8933||+||0.115 * 0.8667|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0027||+||4.679 * -0.0418||-||0.327 * 0.9652|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,051 Mil.|
Revenue was 3973.06397306 + 3007.57575758 + 3954.37731196 + 4685.56701031 = $15,621 Mil.
Gross Profit was 1037.03703704 + 525.974025974 + 906.288532676 + 1243.55670103 = $3,713 Mil.
Total Current Assets was $10,806 Mil.
Total Assets was $39,652 Mil.
Property, Plant and Equipment(Net PPE) was $12,412 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,006 Mil.
Selling, General & Admin. Expense(SGA) was $1,383 Mil.
Total Current Liabilities was $6,172 Mil.
Long-Term Debt was $11,508 Mil.
Net Income was -427.609427609 + -103.896103896 + -178.79161529 + 280.927835052 = $-429 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 76.3187429854 + -88.7445887446 + 652.281134402 + 590.206185567 = $1,230 Mil.
|Accounts Receivable was $2,717 Mil.
Revenue was 4574.72826087 + 3641.77040111 + 4330.58984911 + 4939.91989319 = $17,487 Mil.
Gross Profit was 1195.65217391 + 587.828492393 + 1037.03703704 + 1369.82643525 = $4,190 Mil.
Total Current Assets was $8,913 Mil.
Total Assets was $47,640 Mil.
Property, Plant and Equipment(Net PPE) was $16,239 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,129 Mil.
Selling, General & Admin. Expense(SGA) was $1,544 Mil.
Total Current Liabilities was $8,382 Mil.
Long-Term Debt was $13,625 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)|
|=||(2050.50505051 / 15620.5840529)||/||(2717.39130435 / 17487.0084043)|
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)|
|=||(525.974025974 / 17487.0084043)||/||(1037.03703704 / 15620.5840529)|
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 - (10805.8361392 + 12411.8967452) / 39652.0763187)||/||(1 - (8913.04347826 + 16239.1304348) / 47639.9456522)|
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))|
|=||(1129.0763671 / (1129.0763671 + 16239.1304348))||/||(1006.49528298 / (1006.49528298 + 12411.8967452))|
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)|
|=||(1382.61092498 / 15620.5840529)||/||(1543.62138522 / 17487.0084043)|
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)|
|=||((11508.4175084 + 6171.71717172) / 39652.0763187)||/||((13625 + 8381.79347826) / 47639.9456522)|
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|
|=||(-429.369311744 - 0||-||1230.06147421)||/||39652.0763187|
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.
Lafarge SA has a M-score of -2.96 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
Lafarge SA Annual Data
Lafarge SA Quarterly Data