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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 Meredith Corp was -2.09. The lowest was -3.45. And the median was -2.59.
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 Meredith 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 * 1.1049||+||0.528 * 1.0035||+||0.404 * 1.0164||+||0.892 * 1.0067||+||0.115 * 0.9868|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9919||+||4.679 * -0.0302||-||0.327 * 1.2384|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $264 Mil.|
Revenue was 371.184 + 390.794 + 367.414 + 354.048 = $1,483 Mil.
Gross Profit was 229.297 + 241.529 + 222.648 + 221.832 = $915 Mil.
Total Current Assets was $476 Mil.
Total Assets was $2,543 Mil.
Property, Plant and Equipment(Net PPE) was $198 Mil.
Depreciation, Depletion and Amortization(DDA) was $60 Mil.
Selling, General & Admin. Expense(SGA) was $658 Mil.
Total Current Liabilities was $436 Mil.
Long-Term Debt was $659 Mil.
Net Income was 29.365 + 40.445 + 18.486 + 30.569 = $119 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 11.146 + 86.733 + 30.67 + 67.115 = $196 Mil.
|Accounts Receivable was $237 Mil.
Revenue was 356.452 + 386.973 + 369.615 + 360.595 = $1,474 Mil.
Gross Profit was 215.675 + 242.248 + 228.01 + 226.478 = $912 Mil.
Total Current Assets was $408 Mil.
Total Assets was $2,131 Mil.
Property, Plant and Equipment(Net PPE) was $182 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $659 Mil.
Total Current Liabilities was $397 Mil.
Long-Term Debt was $345 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)|
|=||(263.624 / 1483.44)||/||(237.025 / 1473.635)|
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)|
|=||(241.529 / 1473.635)||/||(229.297 / 1483.44)|
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 - (476.024 + 197.739) / 2542.59)||/||(1 - (408.381 + 181.68) / 2131.096)|
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))|
|=||(54.497 / (54.497 + 181.68))||/||(60.346 / (60.346 + 197.739))|
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)|
|=||(657.845 / 1483.44)||/||(658.856 / 1473.635)|
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)|
|=||((659.375 + 436.249) / 2542.59)||/||((345 + 396.55) / 2131.096)|
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|
|=||(118.865 - 0||-||195.664)||/||2542.59|
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.
Meredith Corp has a M-score of -2.59 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
Meredith Corp Annual Data
Meredith Corp Quarterly Data