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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 -2.71. And the median was -2.54.
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 * 1.0004||+||0.528 * 0.9876||+||0.404 * 1.0142||+||0.892 * 1.0381||+||0.115 * 0.9397|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9934||+||4.679 * -0.0345||-||0.327 * 0.9929|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $295 Mil.|
Revenue was 376.995 + 382.061 + 367.176 + 354.232 = $1,480 Mil.
Gross Profit was 146.83 + 145.297 + 137.76 + 126.567 = $556 Mil.
Total Current Assets was $574 Mil.
Total Assets was $2,091 Mil.
Property, Plant and Equipment(Net PPE) was $219 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $438 Mil.
Total Current Liabilities was $259 Mil.
Long-Term Debt was $845 Mil.
Net Income was 23.863 + 23.915 + 14.357 + 4.614 = $67 Mil.
Non Operating Income was -0.692 + 0.46 + -0.192 + -0.874 = $-1 Mil.
Cash Flow from Operations was 41.869 + 46.514 + 41.872 + 10.019 = $140 Mil.
|Accounts Receivable was $284 Mil.
Revenue was 368.338 + 364.752 + 349.394 + 343.584 = $1,426 Mil.
Gross Profit was 141.574 + 135.436 + 127.695 + 124.67 = $529 Mil.
Total Current Assets was $605 Mil.
Total Assets was $2,144 Mil.
Property, Plant and Equipment(Net PPE) was $227 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $424 Mil.
Total Current Liabilities was $249 Mil.
Long-Term Debt was $891 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)|
|=||(294.915 / 1480.464)||/||(283.963 / 1426.068)|
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)|
|=||(529.375 / 1426.068)||/||(556.454 / 1480.464)|
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 - (574.184 + 219.492) / 2091.041)||/||(1 - (604.901 + 227.408) / 2143.611)|
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))|
|=||(62.62 / (62.62 + 227.408))||/||(65.48 / (65.48 + 219.492))|
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)|
|=||(437.639 / 1480.464)||/||(424.352 / 1426.068)|
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)|
|=||((844.807 + 259.348) / 2091.041)||/||((891.217 + 248.743) / 2143.611)|
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|
|=||(66.749 - -1.298||-||140.274)||/||2091.041|
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