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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 Matthews International Corp was -2.03. The lowest was -3.29. And the median was -2.52.
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 Matthews International 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 * 1.04||+||0.528 * 0.9791||+||0.404 * 0.9864||+||0.892 * 1.0268||+||0.115 * 0.9189|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9551||+||4.679 * -0.0352||-||0.327 * 1.0341|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $286 Mil.|
Revenue was 348.998 + 376.995 + 382.061 + 367.176 = $1,475 Mil.
Gross Profit was 127.267 + 146.83 + 145.297 + 137.76 = $557 Mil.
Total Current Assets was $612 Mil.
Total Assets was $2,107 Mil.
Property, Plant and Equipment(Net PPE) was $210 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $239 Mil.
Long-Term Debt was $914 Mil.
Net Income was 9.088 + 23.863 + 23.915 + 14.357 = $71 Mil.
Non Operating Income was -0.555 + -0.692 + 0.46 + -0.192 = $-1 Mil.
Cash Flow from Operations was 16.046 + 41.869 + 46.514 + 41.872 = $146 Mil.
|Accounts Receivable was $268 Mil.
Revenue was 354.232 + 368.338 + 364.752 + 349.394 = $1,437 Mil.
Gross Profit was 126.567 + 141.574 + 135.436 + 127.695 = $531 Mil.
Total Current Assets was $585 Mil.
Total Assets was $2,126 Mil.
Property, Plant and Equipment(Net PPE) was $227 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $440 Mil.
Total Current Liabilities was $223 Mil.
Long-Term Debt was $901 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)|
|=||(286.269 / 1475.23)||/||(268.071 / 1436.716)|
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)|
|=||(531.272 / 1436.716)||/||(557.154 / 1475.23)|
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 - (612.362 + 209.566) / 2107.344)||/||(1 - (584.568 + 226.772) / 2126.2)|
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))|
|=||(62.94 / (62.94 + 226.772))||/||(64.891 / (64.891 + 209.566))|
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)|
|=||(431.314 / 1475.23)||/||(439.796 / 1436.716)|
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)|
|=||((913.571 + 239.384) / 2107.344)||/||((901.46 + 223.456) / 2126.2)|
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|
|=||(71.223 - -0.979||-||146.301)||/||2107.344|
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.
Matthews International Corp has a M-score of -2.61 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
Matthews International Corp Annual Data
Matthews International Corp Quarterly Data