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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.
Meredith Corp has a M-score of -2.57 suggests that the company is not a 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 * 1.0589||+||0.528 * 0.9978||+||0.404 * 1.029||+||0.892 * 1.0041||+||0.115 * 1.0361|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0232||+||4.679 * -0.0262||-||0.327 * 1.111|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $241 Mil.|
Revenue was 367.414 + 354.048 + 356.452 + 386.973 = $1,465 Mil.
Gross Profit was 222.648 + 221.832 + 215.675 + 242.248 = $902 Mil.
Total Current Assets was $418 Mil.
Total Assets was $2,303 Mil.
Property, Plant and Equipment(Net PPE) was $189 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $661 Mil.
Total Current Liabilities was $459 Mil.
Long-Term Debt was $450 Mil.
Net Income was 18.486 + 30.569 + 24.041 + 33.803 = $107 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 30.67 + 67.115 + -6.428 + 75.785 = $167 Mil.
|Accounts Receivable was $227 Mil.
Revenue was 369.615 + 360.595 + 354.157 + 374.548 = $1,459 Mil.
Gross Profit was 228.01 + 226.478 + 213.546 + 228.741 = $897 Mil.
Total Current Assets was $399 Mil.
Total Assets was $2,065 Mil.
Property, Plant and Equipment(Net PPE) was $188 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $643 Mil.
Total Current Liabilities was $428 Mil.
Long-Term Debt was $305 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)|
|=||(240.846 / 1464.887)||/||(226.522 / 1458.915)|
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)|
|=||(221.832 / 1458.915)||/||(222.648 / 1464.887)|
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 - (418.25 + 188.812) / 2303.206)||/||(1 - (399.354 + 187.722) / 2064.774)|
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))|
|=||(56.93 / (56.93 + 187.722))||/||(54.691 / (54.691 + 188.812))|
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)|
|=||(660.652 / 1464.887)||/||(643.014 / 1458.915)|
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)|
|=||((450 + 459.016) / 2303.206)||/||((305 + 428.477) / 2064.774)|
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|
|=||(106.899 - 0||-||167.142)||/||2303.206|
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 -2.57 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