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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 -2.03. The lowest was -3.30. 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 * 1.0475||+||0.528 * 1.0072||+||0.404 * 1.1992||+||0.892 * 1.3496||+||0.115 * 0.8319|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0714||+||4.679 * -0.0361||-||0.327 * 1.1138|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $262 Mil.|
Revenue was 349.394 + 343.584 + 349.832 + 279.983 = $1,323 Mil.
Gross Profit was 127.695 + 124.67 + 116.708 + 104.23 = $473 Mil.
Total Current Assets was $541 Mil.
Total Assets was $1,921 Mil.
Property, Plant and Equipment(Net PPE) was $198 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $381 Mil.
Total Current Liabilities was $228 Mil.
Long-Term Debt was $684 Mil.
Net Income was 9.576 + 14.951 + 5.164 + 19.263 = $49 Mil.
Non Operating Income was -0.536 + -0.164 + -3.544 + -0.441 = $-5 Mil.
Cash Flow from Operations was 44.824 + 9.292 + 28.852 + 39.939 = $123 Mil.
|Accounts Receivable was $185 Mil.
Revenue was 246.837 + 229.945 + 252.706 + 250.652 = $980 Mil.
Gross Profit was 90.18 + 81.376 + 90.287 + 91.391 = $353 Mil.
Total Current Assets was $421 Mil.
Total Assets was $1,228 Mil.
Property, Plant and Equipment(Net PPE) was $176 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $264 Mil.
Total Current Liabilities was $170 Mil.
Long-Term Debt was $354 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)|
|=||(261.922 / 1322.793)||/||(185.274 / 980.14)|
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)|
|=||(124.67 / 980.14)||/||(127.695 / 1322.793)|
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 - (540.674 + 198.188) / 1921.113)||/||(1 - (421.454 + 176.406) / 1228.061)|
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))|
|=||(39.472 / (39.472 + 176.406))||/||(55.831 / (55.831 + 198.188))|
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)|
|=||(381.44 / 1322.793)||/||(263.789 / 980.14)|
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)|
|=||((684.007 + 228.388) / 1921.113)||/||((354.167 + 169.508) / 1228.061)|
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|
|=||(48.954 - -4.685||-||122.907)||/||1921.113|
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 -2.28 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 Corporation Annual Data
Matthews International Corporation Quarterly Data