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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.
Matthews International Corporation has a M-score of -2.66 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Matthews International Corporation was -2.19. 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 * 0.9588||+||0.528 * 1.0298||+||0.404 * 0.9607||+||0.892 * 1.0432||+||0.115 * 0.8592|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9785||+||4.679 * -0.0408||-||0.327 * 0.9317|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $185.3 Mil.|
Revenue was 246.837 + 229.945 + 252.706 + 250.652 = $980.1 Mil.
Gross Profit was 90.18 + 81.376 + 90.287 + 91.391 = $353.2 Mil.
Total Current Assets was $421.5 Mil.
Total Assets was $1,228.1 Mil.
Property, Plant and Equipment(Net PPE) was $176.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.5 Mil.
Selling, General & Admin. Expense(SGA) was $263.1 Mil.
Total Current Liabilities was $169.5 Mil.
Long-Term Debt was $354.2 Mil.
Net Income was 11.333 + 7.914 + 14.45 + 17.991 = $51.7 Mil.
Non Operating Income was -0.79 + -0.982 + 1.727 + -0.986 = $-1.0 Mil.
Cash Flow from Operations was 11.336 + 12.272 + 36.388 + 42.791 = $102.8 Mil.
|Accounts Receivable was $185.2 Mil.
Revenue was 256.39 + 225.609 + 230.081 + 227.478 = $939.6 Mil.
Gross Profit was 94.866 + 79.974 + 86.159 + 87.709 = $348.7 Mil.
Total Current Assets was $397.7 Mil.
Total Assets was $1,217.7 Mil.
Property, Plant and Equipment(Net PPE) was $169.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.6 Mil.
Selling, General & Admin. Expense(SGA) was $257.8 Mil.
Total Current Liabilities was $180.2 Mil.
Long-Term Debt was $377.1 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)|
|=||(185.274 / 980.14)||/||(185.235 / 939.558)|
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)|
|=||(81.376 / 939.558)||/||(90.18 / 980.14)|
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 - (421.454 + 176.406) / 1228.061)||/||(1 - (397.722 + 169.553) / 1217.703)|
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))|
|=||(31.603 / (31.603 + 169.553))||/||(39.472 / (39.472 + 176.406))|
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)|
|=||(263.123 / 980.14)||/||(257.774 / 939.558)|
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)|
|=||((354.167 + 169.508) / 1228.061)||/||((377.069 + 180.249) / 1217.703)|
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|
|=||(51.688 - -1.031||-||102.787)||/||1228.061|
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 -2.66 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