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MasterCard Inc (NYSE:MA)
Beneish M-Score
-2.44 (As of Today)

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.

MasterCard Inc has a M-score of -2.44 suggests that the company is not a manipulator.

MA' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -1.29
Current: -2.44

-3.48
-1.29

During the past 13 years, the highest Beneish M-Score of MasterCard Inc was -1.29. The lowest was -3.48. And the median was -2.55.


Definition

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 MasterCard 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 * 0.9264+0.528 * 1+0.404 * 1.2775+0.892 * 1.0737+0.115 * 0.9866
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.157+4.679 * -0.0073-0.327 * 1.03
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,128 Mil.
Revenue was 2390 + 2230 + 2416 + 2503 = $9,539 Mil.
Gross Profit was 2390 + 2230 + 2416 + 2503 = $9,539 Mil.
Total Current Assets was $10,217 Mil.
Total Assets was $15,272 Mil.
Property, Plant and Equipment(Net PPE) was $632 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $4,092 Mil.
Total Current Liabilities was $6,476 Mil.
Long-Term Debt was $1,495 Mil.
Net Income was 921 + 1020 + 801 + 1015 = $3,757 Mil.
Non Operating Income was 7 + 6 + 5 + 9 = $27 Mil.
Cash Flow from Operations was 821 + 911 + 725 + 1385 = $3,842 Mil.
Accounts Receivable was $1,134 Mil.
Revenue was 2368 + 2172 + 2126 + 2218 = $8,884 Mil.
Gross Profit was 2368 + 2172 + 2126 + 2218 = $8,884 Mil.
Total Current Assets was $10,577 Mil.
Total Assets was $14,375 Mil.
Property, Plant and Equipment(Net PPE) was $539 Mil.
Depreciation, Depletion and Amortization(DDA) was $289 Mil.
Selling, General & Admin. Expense(SGA) was $3,294 Mil.
Total Current Liabilities was $5,790 Mil.
Long-Term Debt was $1,494 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1128 / 9539) / (1134 / 8884)
=0.11825139 / 0.1276452
=0.9264

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2230 / 8884) / (2390 / 9539)
=1 / 1
=1

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (10217 + 632) / 15272) / (1 - (10577 + 539) / 14375)
=0.28961498 / 0.22671304
=1.2775

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=9539 / 8884
=1.0737

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))
=(289 / (289 + 539)) / (346 / (346 + 632))
=0.34903382 / 0.35378323
=0.9866

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)
=(4092 / 9539) / (3294 / 8884)
=0.42897578 / 0.37077893
=1.157

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)
=((1495 + 6476) / 15272) / ((1494 + 5790) / 14375)
=0.52193557 / 0.50671304
=1.03

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(3757 - 27 - 3842) / 15272
=-0.0073

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.

MasterCard Inc has a M-score of -2.44 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

MasterCard Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.04671.14610.96511.76350.8451.06120.58121.03990.92481.0115
GMI 1111111111
AQI 0.97880.73420.89331.3030.94180.81431.06410.90260.91921.2485
SGI 1.13281.13221.22291.22721.02151.08631.21211.10081.12921.135
DEPI 1.04461.14051.12430.94141.11910.94790.83570.92090.99560.9596
SGAI 0.9910.95720.90770.84150.89870.90280.94940.95840.96461.0214
LVGI 1.02930.83210.99961.15770.91850.83311.10880.99821.07581.1885
TATA 0.0123-0.0366-0.0224-0.12560.00910.0169-0.0733-0.0135-0.07230.0123
M-score -2.27-2.43-2.43-2.07-2.53-2.28-3.04-2.46-2.82-2.26

MasterCard Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.07161.0250.96630.92480.92561.05122.01951.01290.97490.9264
GMI 1111111111
AQI 0.93890.96830.92170.91920.91441.05311.09391.24851.27061.2775
SGI 1.08151.0971.12331.12921.14231.13681.12991.13341.10511.0737
DEPI 0.93150.93270.93250.99560.99880.97510.96270.95960.9440.9866
SGAI 0.95990.9460.94550.96460.96470.8850.88610.92580.92341.157
LVGI 1.01680.93941.0521.07581.35341.40771.26891.18851.0041.03
TATA -0.0443-0.0403-0.0497-0.0723-0.0422-0.0364-0.03110.0123-0.0005-0.0073
M-score -2.58-2.55-2.68-2.82-2.76-2.58-1.61-2.24-2.30-2.44
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