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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 -2.90 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Lexmark International, Inc. was -1.93. The lowest was -3.39. And the median was -2.80.
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 * 0.8945||+||0.528 * 0.9376||+||0.404 * 1.0724||+||0.892 * 0.9657||+||0.115 * 1.0467|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0416||+||4.679 * -0.0581||-||0.327 * 1.031|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $452 Mil.|
Revenue was 1006.1 + 890.5 + 886.7 + 884.3 = $3,668 Mil.
Gross Profit was 423 + 346.2 + 340.2 + 334.6 = $1,444 Mil.
Total Current Assets was $1,972 Mil.
Total Assets was $3,620 Mil.
Property, Plant and Equipment(Net PPE) was $812 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,147 Mil.
Long-Term Debt was $700 Mil.
Net Income was 109.6 + 28.5 + 88.9 + 34.8 = $262 Mil.
Non Operating Income was -1.3 + -0.7 + -1.5 + -4.3 = $-8 Mil.
Cash Flow from Operations was 210.4 + 142.8 + 88.9 + 37.9 = $480 Mil.
|Accounts Receivable was $524 Mil.
Revenue was 967.4 + 919.2 + 918.6 + 992.5 = $3,798 Mil.
Gross Profit was 331.4 + 328.4 + 360.7 + 381.4 = $1,402 Mil.
Total Current Assets was $1,921 Mil.
Total Assets was $3,525 Mil.
Property, Plant and Equipment(Net PPE) was $845 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $805 Mil.
Total Current Liabilities was $1,445 Mil.
Long-Term Debt was $300 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)|
|=||(452.3 / 3667.6)||/||(523.6 / 3797.7)|
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)|
|=||(346.2 / 3797.7)||/||(423 / 3667.6)|
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 - (1971.7 + 812.4) / 3619.5)||/||(1 - (1921.3 + 845.3) / 3525.3)|
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))|
|=||(275.8 / (275.8 + 845.3))||/||(249.6 / (249.6 + 812.4))|
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)|
|=||(810.1 / 3667.6)||/||(805.3 / 3797.7)|
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)|
|=||((699.6 + 1146.9) / 3619.5)||/||((299.6 + 1444.7) / 3525.3)|
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|
|=||(261.8 - -7.8||-||480)||/||3619.5|
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 -2.90 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