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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.
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 -2.67.
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 * 0.9898||+||0.528 * 0.9886||+||0.404 * 0.9018||+||0.892 * 1.0378||+||0.115 * 0.9999|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9684||+||4.679 * 0.0182||-||0.327 * 1.008|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,248 Mil.|
Revenue was 2018 + 2064 + 2232 + 2260 = $8,574 Mil.
Gross Profit was 568 + 568 + 611 + 661 = $2,408 Mil.
Total Current Assets was $4,179 Mil.
Total Assets was $7,468 Mil.
Property, Plant and Equipment(Net PPE) was $1,106 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $1,609 Mil.
Total Current Liabilities was $2,207 Mil.
Long-Term Debt was $3,418 Mil.
Net Income was 64 + 100 + 543 + 139 = $846 Mil.
Non Operating Income was 1 + 2 + 7 + 6 = $16 Mil.
Cash Flow from Operations was -152 + 296 + 245 + 305 = $694 Mil.
|Accounts Receivable was $1,215 Mil.
Revenue was 1965 + 1998 + 2150 + 2149 = $8,262 Mil.
Gross Profit was 547 + 531 + 607 + 609 = $2,294 Mil.
Total Current Assets was $3,418 Mil.
Total Assets was $6,880 Mil.
Property, Plant and Equipment(Net PPE) was $1,232 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $1,601 Mil.
Total Current Liabilities was $1,720 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)|
|=||(1248 / 8574)||/||(1215 / 8262)|
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)|
|=||(568 / 8262)||/||(568 / 8574)|
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 - (4179 + 1106) / 7468)||/||(1 - (3418 + 1232) / 6880)|
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))|
|=||(186 / (186 + 1232))||/||(167 / (167 + 1106))|
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)|
|=||(1609 / 8574)||/||(1601 / 8262)|
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)|
|=||((3418 + 2207) / 7468)||/||((3421 + 1720) / 6880)|
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|
|=||(846 - 16||-||694)||/||7468|
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 -2.41 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