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GuruFocus has detected 4 Warning Signs with Matthews International Corp $MATW.
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Matthews International Corp (NAS:MATW)
Beneish M-Score
-2.61 (As of Today)

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.

Matthews International Corp has a M-score of -2.61 suggests that the company is not a manipulator.

MATW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.29   Max: -2.03
Current: -2.61

-3.29
-2.03

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.


Definition

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
=-2.61

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.19405042 / 0.18658594
=1.04

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(531.272 / 1436.716) / (557.154 / 1475.23)
=0.3697822 / 0.37767263
=0.9791

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.60996971 / 0.61840843
=0.9864

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1475.23 / 1436.716
=1.0268

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))
=0.21725023 / 0.23643412
=0.9189

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)
=0.29237068 / 0.30611199
=0.9551

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)
=0.54711286 / 0.52907346
=1.0341

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(71.223 - -0.979 - 146.301) / 2107.344
=-0.0352

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Matthews International Corp Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.94851.10021.00241.0330.99731.05830.92931.41730.77941.0004
GMI 1.01490.94871.04510.95931.00581.04661.03321.02010.95550.9876
AQI 1.00220.94441.0470.99761.01640.96890.99221.18740.99171.0142
SGI 1.04671.09240.95391.05241.09371.00171.09451.1231.28871.0381
DEPI 1.04451.28370.8121.03441.01981.02310.96251.01910.78720.9397
SGAI 1.01931.03141.0691.01421.03081.04480.98081.05731.05890.9934
LVGI 0.95841.20870.9350.96461.11791.01111.04931.07251.11280.9929
TATA -0.0128-0.0299-0.037-0.0364-0.0248-0.0223-0.0415-0.0213-0.0386-0.0345
M-score -2.52-2.54-2.66-2.58-2.55-2.53-2.66-2.03-2.70-2.61

Matthews International Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.41731.26041.04750.96470.77940.85090.95061.01651.00041.04
GMI 1.02011.01261.00721.01170.95550.96580.96140.95710.98760.9791
AQI 1.18741.19281.19921.2260.99170.99991.01251.00151.01420.9864
SGI 1.1231.23291.34961.39441.28871.17741.09961.04561.03811.0268
DEPI 1.01910.93350.83190.77430.78720.88531.02151.05110.93970.9189
SGAI 1.05731.05041.06861.08271.05891.08791.05361.00560.99340.9551
LVGI 1.07251.08831.11381.12291.11281.12531.08561.14170.99291.0341
TATA -0.0215-0.0161-0.0336-0.0425-0.0386-0.0444-0.0415-0.0354-0.0345-0.0352
M-score -2.03-2.07-2.27-2.34-2.70-2.75-2.68-2.65-2.61-2.61
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