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MasterCard Inc (NYSE:MA)
Beneish M-Score
-2.37 (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 -2.37 suggests that the company is not a manipulator.

MA' s 10-Year Beneish M-Score Range
Min: -3.6   Max: -1.29
Current: -2.37

-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 -2.46.


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 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 * 1.3419+0.528 * 1+0.404 * 0.9144+0.892 * 1.143+0.115 * 0.9988
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9654+4.679 * -0.0392-0.327 * 1.3534
=-2.37

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $2,471 Mil.
Revenue was 2177 + 2126 + 2218 + 2096 = $8,617 Mil.
Gross Profit was 2177 + 2126 + 2218 + 2096 = $8,617 Mil.
Total Current Assets was $11,342 Mil.
Total Assets was $14,802 Mil.
Property, Plant and Equipment(Net PPE) was $528 Mil.
Depreciation, Depletion and Amortization(DDA) was $269 Mil.
Selling, General & Admin. Expense(SGA) was $3,572 Mil.
Total Current Liabilities was $5,994 Mil.
Long-Term Debt was $1,494 Mil.
Net Income was 870 + 623 + 879 + 848 = $3,220 Mil.
Non Operating Income was 2 + -40 + -3 + 10 = $-31 Mil.
Cash Flow from Operations was 568 + 1199 + 1322 + 742 = $3,831 Mil.
Accounts Receivable was $1,611 Mil.
Revenue was 1906 + 1895 + 1918 + 1820 = $7,539 Mil.
Gross Profit was 1906 + 1895 + 1918 + 1820 = $7,539 Mil.
Total Current Assets was $8,783 Mil.
Total Assets was $11,809 Mil.
Property, Plant and Equipment(Net PPE) was $468 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $3,237 Mil.
Total Current Liabilities was $4,414 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)
=(2471 / 8617) / (1611 / 7539)
=0.28675873 / 0.21368882
=1.3419

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)
=(2126 / 7539) / (2177 / 8617)
=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 - (11342 + 528) / 14802) / (1 - (8783 + 468) / 11809)
=0.19808134 / 0.21661445
=0.9144

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
=8617 / 7539
=1.143

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))
=(238 / (238 + 468)) / (269 / (269 + 528))
=0.33711048 / 0.33751568
=0.9988

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)
=(3572 / 8617) / (3237 / 7539)
=0.41452942 / 0.42936729
=0.9654

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 + 5994) / 14802) / ((0 + 4414) / 11809)
=0.50587758 / 0.37378271
=1.3534

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
=(3220 - -31 - 3831) / 14802
=-0.0392

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 -2.37 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 1.04671.93841.33410.88410.7211.06121.01341.31651.0048
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 Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.01341.16471.16921.19511.31651.01610.89281.1991.00481.3419
GMI 1111111111
AQI 1.06410.98420.78380.83440.90260.93890.96830.92170.91920.9144
SGI 1.21211.21621.18061.12451.10081.08151.0971.12331.12921.143
DEPI 0.83570.83520.85460.90360.92090.93150.93270.93250.99560.9988
SGAI 0.94940.95340.95130.96110.95840.95990.9460.94550.96460.9654
LVGI 1.10881.11991.16671.16910.99821.01680.93941.0521.07581.3534
TATA -0.0733-0.066-0.0667-0.057-0.0128-0.0443-0.0403-0.0492-0.0692-0.0392
M-score -2.64-2.50-2.63-2.58-2.20-2.63-2.67-2.46-2.74-2.37
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