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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.
Masco Corp has a M-score of -2.65 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Masco Corp was -0.95. The lowest was -3.50. And the median was -2.68.
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 Masco Corp 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 * 0.9807||+||0.528 * 0.9308||+||0.404 * 0.9437||+||0.892 * 1.0611||+||0.115 * 1.0826|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.961||+||4.679 * -0.0378||-||0.327 * 0.9629|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,306 Mil.|
Revenue was 2260 + 1965 + 1998 + 2150 = $8,373 Mil.
Gross Profit was 661 + 547 + 531 + 607 = $2,346 Mil.
Total Current Assets was $3,783 Mil.
Total Assets was $7,227 Mil.
Property, Plant and Equipment(Net PPE) was $1,216 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $1,601 Mil.
Total Current Liabilities was $2,462 Mil.
Long-Term Debt was $2,921 Mil.
Net Income was 139 + 74 + 45 + 103 = $361 Mil.
Non Operating Income was 6 + -3 + -16 + 0 = $-13 Mil.
Cash Flow from Operations was 305 + -244 + 295 + 291 = $647 Mil.
|Accounts Receivable was $1,255 Mil.
Revenue was 2149 + 1876 + 1890 + 1976 = $7,891 Mil.
Gross Profit was 609 + 508 + 441 + 500 = $2,058 Mil.
Total Current Assets was $3,479 Mil.
Total Assets was $7,062 Mil.
Property, Plant and Equipment(Net PPE) was $1,276 Mil.
Depreciation, Depletion and Amortization(DDA) was $214 Mil.
Selling, General & Admin. Expense(SGA) was $1,570 Mil.
Total Current Liabilities was $2,042 Mil.
Long-Term Debt was $3,421 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1306 / 8373)||/||(1255 / 7891)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(547 / 7891)||/||(661 / 8373)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3783 + 1216) / 7227)||/||(1 - (3479 + 1276) / 7062)|
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.
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))|
|=||(214 / (214 + 1276))||/||(186 / (186 + 1216))|
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)|
|=||(1601 / 8373)||/||(1570 / 7891)|
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)|
|=||((2921 + 2462) / 7227)||/||((3421 + 2042) / 7062)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(361 - -13||-||647)||/||7227|
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.
Masco Corp has a M-score of -2.65 suggests that the company will not be a manipulator.
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
Masco Corp Annual Data
Masco Corp Quarterly Data