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MasterCard Inc (NYSE:MA)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

MA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: -1.29
Current: -2.63

-3.56
-1.29

During the past 13 years, the highest Beneish M-Score of MasterCard Inc was -1.29. The lowest was -3.56. And the median was -2.56.


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 * 0.9968+0.528 * 1+0.404 * 0.9764+0.892 * 1.07+0.115 * 0.9953
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0358+4.679 * -0.0315-0.327 * 1.1494
=-2.63

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,203 Mil.
Revenue was 2694 + 2446 + 2517 + 2530 = $10,187 Mil.
Gross Profit was 2694 + 2446 + 2517 + 2530 = $10,187 Mil.
Total Current Assets was $10,998 Mil.
Total Assets was $16,282 Mil.
Property, Plant and Equipment(Net PPE) was $680 Mil.
Depreciation, Depletion and Amortization(DDA) was $375 Mil.
Selling, General & Admin. Expense(SGA) was $4,524 Mil.
Total Current Liabilities was $6,462 Mil.
Long-Term Debt was $3,306 Mil.
Net Income was 983 + 959 + 890 + 977 = $3,809 Mil.
Non Operating Income was 7 + 9 + -70 + -2 = $-56 Mil.
Cash Flow from Operations was 1059 + 1008 + 1039 + 1272 = $4,378 Mil.
Accounts Receivable was $1,128 Mil.
Revenue was 2390 + 2230 + 2411 + 2490 = $9,521 Mil.
Gross Profit was 2390 + 2230 + 2411 + 2490 = $9,521 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 $4,082 Mil.
Total Current Liabilities was $6,476 Mil.
Long-Term Debt was $1,495 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)
=(1203 / 10187) / (1128 / 9521)
=0.11809169 / 0.11847495
=0.9968

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)
=(9521 / 9521) / (10187 / 10187)
=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 - (10998 + 680) / 16282) / (1 - (10217 + 632) / 15272)
=0.28276624 / 0.28961498
=0.9764

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
=10187 / 9521
=1.07

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))
=(346 / (346 + 632)) / (375 / (375 + 680))
=0.35378323 / 0.35545024
=0.9953

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)
=(4524 / 10187) / (4082 / 9521)
=0.44409542 / 0.42873648
=1.0358

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)
=((3306 + 6462) / 16282) / ((1495 + 6476) / 15272)
=0.5999263 / 0.52193557
=1.1494

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
=(3809 - -56 - 4378) / 16282
=-0.0315

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 -2.63 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.14610.96511.76350.8451.06120.58121.03990.92861.01070.9502
GMI 1111111111
AQI 0.73420.89331.3030.94180.81431.06410.90260.91921.24851.1683
SGI 1.13221.22291.22721.02151.08631.21211.10081.12461.13581.0239
DEPI 1.14051.12430.94141.11910.94790.83570.92090.99560.95960.9754
SGAI 0.95720.90770.84150.89870.90280.94940.95840.95861.03081.0249
LVGI 0.83210.99961.15770.91850.83311.10880.99821.07581.18851.1669
TATA -0.1231-0.0262-0.12560.00910.0169-0.0735-0.0165-0.07230.0123-0.0108
M-score -2.83-2.45-2.07-2.53-2.28-3.04-2.47-2.82-2.26-2.55

MasterCard Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.92931.05522.02991.01070.97290.92460.45660.95021.06340.9968
GMI 1111111111
AQI 0.91441.05311.09391.24851.27061.27751.3891.16831.15660.9764
SGI 1.13781.13241.12411.13581.10741.07581.04811.02391.04041.07
DEPI 0.99880.97510.96270.95960.9440.986610.97540.99710.9953
SGAI 0.95870.87870.88250.9360.93351.16461.18121.10531.151.0358
LVGI 1.35341.40771.26891.18851.0041.031.01471.16691.20981.1494
TATA -0.0422-0.0364-0.03110.0123-0.0005-0.0073-0.0018-0.0108-0.0212-0.0315
M-score -2.76-2.58-1.60-2.25-2.30-2.44-2.82-2.56-2.52-2.63
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