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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 Lexmark International Inc was -1.88. The lowest was -3.41. And the median was -2.71.
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 * 0.8471||+||0.528 * 0.9928||+||0.404 * 1.0784||+||0.892 * 0.95||+||0.115 * 0.8661|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1617||+||4.679 * -0.0882||-||0.327 * 1.0123|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $373 Mil.|
Revenue was 862.6 + 806.2 + 968.8 + 851.1 = $3,489 Mil.
Gross Profit was 337 + 306.4 + 385.2 + 319.6 = $1,348 Mil.
Total Current Assets was $904 Mil.
Total Assets was $3,670 Mil.
Property, Plant and Equipment(Net PPE) was $702 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $1,054 Mil.
Total Current Liabilities was $1,098 Mil.
Long-Term Debt was $989 Mil.
Net Income was -35.4 + -39.4 + -10.7 + -15.2 = $-101 Mil.
Non Operating Income was -0.7 + -0.4 + -0.2 + -3.4 = $-5 Mil.
Cash Flow from Operations was 23.5 + 79.1 + 103.1 + 21.9 = $228 Mil.
|Accounts Receivable was $464 Mil.
Revenue was 879.3 + 852 + 1022.9 + 918.1 = $3,672 Mil.
Gross Profit was 362.1 + 329.9 + 359.7 + 357.3 = $1,409 Mil.
Total Current Assets was $1,170 Mil.
Total Assets was $4,042 Mil.
Property, Plant and Equipment(Net PPE) was $765 Mil.
Depreciation, Depletion and Amortization(DDA) was $271 Mil.
Selling, General & Admin. Expense(SGA) was $955 Mil.
Total Current Liabilities was $1,212 Mil.
Long-Term Debt was $1,058 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)|
|=||(373.1 / 3488.7)||/||(463.6 / 3672.3)|
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)|
|=||(1409 / 3672.3)||/||(1348.2 / 3488.7)|
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 - (904.3 + 702.1) / 3670.4)||/||(1 - (1169.6 + 764.5) / 4041.5)|
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))|
|=||(270.8 / (270.8 + 764.5))||/||(303.8 / (303.8 + 702.1))|
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)|
|=||(1053.7 / 3488.7)||/||(954.8 / 3672.3)|
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)|
|=||((988.7 + 1098.4) / 3670.4)||/||((1057.8 + 1212.4) / 4041.5)|
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|
|=||(-100.7 - -4.7||-||227.6)||/||3670.4|
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 -3.10 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