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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 Corporation was -2.11. The lowest was -2.74. And the median was -2.53.
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 Corporation 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 * 1.3362||+||0.528 * 1.0201||+||0.404 * 1.1884||+||0.892 * 1.123||+||0.115 * 1.0191|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0574||+||4.679 * -0.0211||-||0.327 * 1.081|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $283 Mil.|
Revenue was 349.832 + 279.983 + 246.837 + 229.945 = $1,107 Mil.
Gross Profit was 116.708 + 104.23 + 90.18 + 81.376 = $392 Mil.
Total Current Assets was $574 Mil.
Total Assets was $2,032 Mil.
Property, Plant and Equipment(Net PPE) was $209 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $310 Mil.
Total Current Liabilities was $253 Mil.
Long-Term Debt was $714 Mil.
Net Income was 5.164 + 19.263 + 11.333 + 7.914 = $44 Mil.
Non Operating Income was -3.544 + -0.441 + -0.79 + -0.982 = $-6 Mil.
Cash Flow from Operations was 28.852 + 39.939 + 11.336 + 12.272 = $92 Mil.
|Accounts Receivable was $188 Mil.
Revenue was 252.706 + 250.652 + 256.39 + 225.609 = $985 Mil.
Gross Profit was 90.287 + 91.391 + 94.866 + 79.974 = $357 Mil.
Total Current Assets was $406 Mil.
Total Assets was $1,215 Mil.
Property, Plant and Equipment(Net PPE) was $181 Mil.
Depreciation, Depletion and Amortization(DDA) was $38 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $184 Mil.
Long-Term Debt was $351 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)|
|=||(282.73 / 1106.597)||/||(188.405 / 985.357)|
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)|
|=||(104.23 / 985.357)||/||(116.708 / 1106.597)|
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 - (573.915 + 209.315) / 2031.735)||/||(1 - (405.982 + 180.731) / 1214.927)|
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))|
|=||(37.865 / (37.865 + 180.731))||/||(42.864 / (42.864 + 209.315))|
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)|
|=||(309.603 / 1106.597)||/||(260.726 / 985.357)|
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)|
|=||((714.027 + 253.283) / 2031.735)||/||((351.068 + 184.006) / 1214.927)|
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|
|=||(43.674 - -5.757||-||92.399)||/||2031.735|
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 Corporation has a M-score of -2.11 signals that the company is likely to 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 Corporation Annual Data
Matthews International Corporation Quarterly Data