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MasterCard Inc (NYSE:MA)
Beneish M-Score
-2.27 (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 -2.27 suggests that the company is not a manipulator.

MA' s 10-Year Beneish M-Score Range
Min: -3.6   Max: -1.29
Current: -2.27

-3.6
-1.29

During the past 13 years, the highest Beneish M-Score of MasterCard Inc was -1.29. The lowest was -3.60. And the median was -2.42.


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 * 1.3894+0.528 * 1+0.404 * 1.0531+0.892 * 1.1386+0.115 * 0.9751
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9867+4.679 * -0.0333-0.327 * 1.4077
=-2.27

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,558 Mil.
Revenue was 2377 + 2177 + 2126 + 2218 = $8,898 Mil.
Gross Profit was 2377 + 2177 + 2126 + 2218 = $8,898 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 $3,678 Mil.
Total Current Liabilities was $5,790 Mil.
Long-Term Debt was $1,494 Mil.
Net Income was 931 + 870 + 623 + 879 = $3,303 Mil.
Non Operating Income was 5 + 2 + -40 + -3 = $-36 Mil.
Cash Flow from Operations was 729 + 568 + 1199 + 1322 = $3,818 Mil.
Accounts Receivable was $1,617 Mil.
Revenue was 2096 + 1906 + 1895 + 1918 = $7,815 Mil.
Gross Profit was 2096 + 1906 + 1895 + 1918 = $7,815 Mil.
Total Current Assets was $8,962 Mil.
Total Assets was $12,021 Mil.
Property, Plant and Equipment(Net PPE) was $471 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $3,274 Mil.
Total Current Liabilities was $4,327 Mil.
Long-Term Debt was $0 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)
=(2558 / 8898) / (1617 / 7815)
=0.28748033 / 0.20690979
=1.3894

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)
=(2177 / 7815) / (2377 / 8898)
=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 - (10577 + 539) / 14375) / (1 - (8962 + 471) / 12021)
=0.22671304 / 0.21528991
=1.0531

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
=8898 / 7815
=1.1386

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))
=(243 / (243 + 471)) / (289 / (289 + 539))
=0.34033613 / 0.34903382
=0.9751

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)
=(3678 / 8898) / (3274 / 7815)
=0.41335131 / 0.41893794
=0.9867

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)
=((1494 + 5790) / 14375) / ((0 + 4327) / 12021)
=0.50671304 / 0.35995341
=1.4077

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
=(3303 - -36 - 3818) / 14375
=-0.0333

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 -2.27 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.04671.93841.33410.88410.72151.06041.01341.31651.0048
GMI 111111111
AQI 0.97880.73420.89331.3030.94180.81431.06410.90260.9192
SGI 1.13281.13221.22291.22721.02151.08641.21211.10081.1292
DEPI 1.04461.14051.12430.94141.11680.94980.83570.92090.9956
SGAI 0.9910.95720.90770.84150.89860.90290.94940.95840.9646
LVGI 1.02930.83210.99961.15770.91840.83321.10880.99821.0758
TATA 0.0123-0.0366-0.0224-0.12560.0090.0169-0.0733-0.0134-0.0697
M-score -2.27-1.70-2.09-2.88-2.64-2.28-2.64-2.20-2.74

MasterCard Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.16471.16921.19511.31651.01610.89281.1991.00481.34191.3894
GMI 1111111111
AQI 0.98420.78380.83440.90260.93890.96830.92170.91920.91441.0531
SGI 1.21621.18061.12451.10081.08151.0971.12331.12921.1431.1386
DEPI 0.83520.85460.90360.92090.93150.93270.93250.99560.99880.9751
SGAI 0.95340.95130.96110.95840.95990.9460.94550.96460.96540.9867
LVGI 1.11991.16671.16910.99821.01680.93941.0521.07581.35341.4077
TATA -0.0659-0.0658-0.0554-0.0134-0.0451-0.0418-0.0512-0.0692-0.0392-0.0333
M-score -2.50-2.62-2.58-2.20-2.63-2.68-2.47-2.74-2.37-2.27
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