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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.
Lexmark International Inc has a M-score of -3.03 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Lexmark International Inc was -1.88. The lowest was -3.40. And the median was -2.69.
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 Lexmark International Inc 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 * 0.7618||+||0.528 * 0.9161||+||0.404 * 1.1013||+||0.892 * 1.0023||+||0.115 * 1.0677|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9998||+||4.679 * -0.0724||-||0.327 * 1.0094|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $403 Mil.|
Revenue was 891.8 + 877.7 + 1006.1 + 890.5 = $3,666 Mil.
Gross Profit was 351.2 + 341.6 + 423 + 346.2 = $1,462 Mil.
Total Current Assets was $1,924 Mil.
Total Assets was $3,526 Mil.
Property, Plant and Equipment(Net PPE) was $799 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $811 Mil.
Total Current Liabilities was $1,066 Mil.
Long-Term Debt was $700 Mil.
Net Income was 37.5 + 29.3 + 109.6 + 28.5 = $205 Mil.
Non Operating Income was 0.3 + -0.7 + -1.3 + -0.7 = $-2 Mil.
Cash Flow from Operations was 101.7 + 10 + 210.4 + 140.3 = $462 Mil.
|Accounts Receivable was $528 Mil.
Revenue was 886.7 + 884.3 + 967.4 + 919.2 = $3,658 Mil.
Gross Profit was 341.9 + 336.4 + 329.6 + 328.4 = $1,336 Mil.
Total Current Assets was $2,020 Mil.
Total Assets was $3,544 Mil.
Property, Plant and Equipment(Net PPE) was $791 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,059 Mil.
Long-Term Debt was $700 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)|
|=||(403.1 / 3666.1)||/||(527.9 / 3657.6)|
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)|
|=||(341.6 / 3657.6)||/||(351.2 / 3666.1)|
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 - (1924.1 + 798.6) / 3525.8)||/||(1 - (2019.8 + 791) / 3543.7)|
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))|
|=||(279.5 / (279.5 + 791))||/||(258.5 / (258.5 + 798.6))|
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)|
|=||(811.2 / 3666.1)||/||(809.5 / 3657.6)|
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)|
|=||((699.7 + 1066.2) / 3525.8)||/||((699.6 + 1058.8) / 3543.7)|
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|
|=||(204.9 - -2.4||-||462.4)||/||3525.8|
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.
Lexmark International Inc has a M-score of -3.03 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
Lexmark International Inc Annual Data
Lexmark International Inc Quarterly Data