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MasterCard Inc (NYSE:MA)
Beneish M-Score
-1.61 (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 -1.61 signals that the company is a manipulator.

MA' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -1.29
Current: -1.61

-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 * 2.0164+0.528 * 1+0.404 * 1.0939+0.892 * 1.1316+0.115 * 0.9627
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.985+4.679 * -0.0285-0.327 * 1.2689
=-1.61

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $2,259 Mil.
Revenue was 2503 + 2377 + 2177 + 2126 = $9,183 Mil.
Gross Profit was 2503 + 2377 + 2177 + 2126 = $9,183 Mil.
Total Current Assets was $10,956 Mil.
Total Assets was $14,659 Mil.
Property, Plant and Equipment(Net PPE) was $553 Mil.
Depreciation, Depletion and Amortization(DDA) was $308 Mil.
Selling, General & Admin. Expense(SGA) was $3,772 Mil.
Total Current Liabilities was $5,849 Mil.
Long-Term Debt was $1,494 Mil.
Net Income was 1015 + 931 + 870 + 623 = $3,439 Mil.
Non Operating Income was 9 + 5 + 2 + -40 = $-24 Mil.
Cash Flow from Operations was 1385 + 729 + 568 + 1199 = $3,881 Mil.
Accounts Receivable was $990 Mil.
Revenue was 2218 + 2096 + 1906 + 1895 = $8,115 Mil.
Gross Profit was 2218 + 2096 + 1906 + 1895 = $8,115 Mil.
Total Current Assets was $10,559 Mil.
Total Assets was $13,730 Mil.
Property, Plant and Equipment(Net PPE) was $474 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $3,384 Mil.
Total Current Liabilities was $5,420 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)
=(2259 / 9183) / (990 / 8115)
=0.24599804 / 0.1219963
=2.0164

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)
=(2377 / 8115) / (2503 / 9183)
=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 - (10956 + 553) / 14659) / (1 - (10559 + 474) / 13730)
=0.21488505 / 0.19643117
=1.0939

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
=9183 / 8115
=1.1316

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))
=(249 / (249 + 474)) / (308 / (308 + 553))
=0.34439834 / 0.35772358
=0.9627

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)
=(3772 / 9183) / (3384 / 8115)
=0.41075901 / 0.41700555
=0.985

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 + 5849) / 14659) / ((0 + 5420) / 13730)
=0.50092094 / 0.39475601
=1.2689

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
=(3439 - -24 - 3881) / 14659
=-0.0285

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 -1.61 signals that the company is likely to 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 1.04671.14610.96511.76350.8451.06120.58121.03990.9248
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 -2.27-2.43-2.43-2.07-2.53-2.28-3.04-2.46-2.81

MasterCard Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.00261.06291.03991.07161.0250.96630.92480.92511.04952.0164
GMI 1111111111
AQI 0.78380.83440.90260.93890.96830.92170.91920.91441.05311.0939
SGI 1.18061.12451.10081.08151.0971.12331.12921.1431.13861.1316
DEPI 0.85460.90360.92090.93150.93270.93250.99560.99880.97510.9627
SGAI 0.95130.96110.95840.95990.9460.94550.96460.96540.98670.985
LVGI 1.16671.16910.99821.01680.93941.0521.07581.35341.40771.2689
TATA -0.0667-0.057-0.0128-0.0443-0.0403-0.0497-0.0697-0.0396-0.0337-0.0285
M-score -2.78-2.70-2.45-2.58-2.55-2.68-2.81-2.75-2.58-1.61
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