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MasterCard Incorporated (NYSE:MA)
Beneish M-Score
-2.73 (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 Incorporated has a M-score of -2.73 suggests that the company is not a manipulator.

MA' s 10-Year Beneish M-Score Range
Min: -2.86   Max: -2.09
Current: -2.73

-2.86
-2.09

During the past 13 years, the highest Beneish M-Score of MasterCard Incorporated was -2.09. The lowest was -2.86. And the median was -2.46.


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 Incorporated 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 * 1.0048+0.528 * 1+0.404 * 0.9192+0.892 * 1.1292+0.115 * 0.9956
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9646+4.679 * -0.0687-0.327 * 1.0758
=-2.73

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $2,317 Mil.
Revenue was 2126 + 2218 + 2096 + 1906 = $8,346 Mil.
Gross Profit was 2126 + 2218 + 2096 + 1906 = $8,346 Mil.
Total Current Assets was $10,950 Mil.
Total Assets was $14,242 Mil.
Property, Plant and Equipment(Net PPE) was $526 Mil.
Depreciation, Depletion and Amortization(DDA) was $258 Mil.
Selling, General & Admin. Expense(SGA) was $3,490 Mil.
Total Current Liabilities was $6,032 Mil.
Long-Term Debt was $0 Mil.
Net Income was 623 + 879 + 848 + 766 = $3,116 Mil.
Non Operating Income was -40 + -3 + 10 + -8 = $-41 Mil.
Cash Flow from Operations was 1199 + 1322 + 742 + 872 = $4,135 Mil.
Accounts Receivable was $2,042 Mil.
Revenue was 1895 + 1918 + 1820 + 1758 = $7,391 Mil.
Gross Profit was 1895 + 1918 + 1820 + 1758 = $7,391 Mil.
Total Current Assets was $9,357 Mil.
Total Assets was $12,462 Mil.
Property, Plant and Equipment(Net PPE) was $472 Mil.
Depreciation, Depletion and Amortization(DDA) was $230 Mil.
Selling, General & Admin. Expense(SGA) was $3,204 Mil.
Total Current Liabilities was $4,906 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)
=(2317 / 8346) / (2042 / 7391)
=0.27761802 / 0.27628196
=1.0048

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)
=(2218 / 7391) / (2126 / 8346)
=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 - (10950 + 526) / 14242) / (1 - (9357 + 472) / 12462)
=0.1942143 / 0.2112823
=0.9192

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
=8346 / 7391
=1.1292

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))
=(230 / (230 + 472)) / (258 / (258 + 526))
=0.32763533 / 0.32908163
=0.9956

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)
=(3490 / 8346) / (3204 / 7391)
=0.41816439 / 0.4335002
=0.9646

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)
=((0 + 6032) / 14242) / ((0 + 4906) / 12462)
=0.42353602 / 0.39367678
=1.0758

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
=(3116 - -41 - 4135) / 14242
=-0.0687

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 Incorporated has a M-score of -2.73 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 Incorporated Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.04671.93841.33410.88410.7211.06121.01341.31651.0048
GMI 111111111
AQI 0.97880.73420.89331.3030.94180.81431.06410.90260.9192
SGI 1.13281.13221.22291.22721.02151.08631.21211.10081.1292
DEPI 1.04461.14051.12430.94141.11910.94790.83570.92090.9956
SGAI 0.9910.95720.90770.84150.89870.90280.94940.95840.9646
LVGI 1.02930.83210.99961.15770.91850.83311.10880.99821.0758
TATA 0.0123-0.0366-0.0224-0.12560.00910.0169-0.0733-0.0135-0.0697
M-score -2.27-1.70-2.09-2.88-2.64-2.28-2.64-2.20-2.74

MasterCard Incorporated Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.10221.01341.16471.16921.19511.31651.01610.89281.1991.0048
GMI 0.7594111111111
AQI 1.39051.06410.98420.78380.83440.90260.93890.96830.92170.9192
SGI 1.18961.21211.21621.18061.12451.10081.08151.0971.12331.1292
DEPI 0.85990.83570.83520.85460.90360.92090.93150.93270.93250.9956
SGAI 0.95130.94940.95340.95130.96110.95840.95990.9460.94550.9646
LVGI 0.92521.10881.11991.16671.16910.99821.01680.93941.0521.0758
TATA -0.0289-0.0733-0.066-0.0667-0.057-0.0128-0.0436-0.0396-0.0487-0.0687
M-score -2.30-2.64-2.50-2.63-2.58-2.20-2.63-2.67-2.46-2.73
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