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Mead Johnson Nutrition Co (NYSE:MJN)
Beneish M-Score
-3.04 (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.

Mead Johnson Nutrition Co has a M-score of -3.04 suggests that the company is not a manipulator.

MJN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -2.06
Current: -3.04

-3.17
-2.06

During the past 13 years, the highest Beneish M-Score of Mead Johnson Nutrition Co was -2.06. The lowest was -3.17. And the median was -2.66.


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 Mead Johnson Nutrition Co 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 * 1.064+0.528 * 0.9583+0.404 * 0.9862+0.892 * 0.8972+0.115 * 0.9701
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0445+4.679 * -0.0689-0.327 * 1.5174
=-3.04

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $378 Mil.
Revenue was 962.1 + 967 + 977.5 + 1032.4 = $3,939 Mil.
Gross Profit was 614.5 + 608.4 + 630.7 + 676 = $2,530 Mil.
Total Current Assets was $2,634 Mil.
Total Assets was $4,017 Mil.
Property, Plant and Equipment(Net PPE) was $927 Mil.
Depreciation, Depletion and Amortization(DDA) was $100 Mil.
Selling, General & Admin. Expense(SGA) was $1,506 Mil.
Total Current Liabilities was $1,242 Mil.
Long-Term Debt was $3,013 Mil.
Net Income was 72.7 + 128 + 155.2 + 162.9 = $519 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 160.1 + 301 + 152.4 + 182 = $796 Mil.
Accounts Receivable was $396 Mil.
Revenue was 1094.4 + 1094.2 + 1090.7 + 1111.1 = $4,390 Mil.
Gross Profit was 700.9 + 664 + 652.8 + 684.3 = $2,702 Mil.
Total Current Assets was $2,539 Mil.
Total Assets was $3,885 Mil.
Property, Plant and Equipment(Net PPE) was $899 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $1,607 Mil.
Total Current Liabilities was $1,200 Mil.
Long-Term Debt was $1,512 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)
=(378.4 / 3939) / (396.4 / 4390.4)
=0.09606499 / 0.0902879
=1.064

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)
=(608.4 / 4390.4) / (614.5 / 3939)
=0.61543367 / 0.64219345
=0.9583

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 - (2634.4 + 927) / 4016.8) / (1 - (2538.9 + 899.2) / 3884.7)
=0.11337383 / 0.11496383
=0.9862

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
=3939 / 4390.4
=0.8972

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))
=(93.7 / (93.7 + 899.2)) / (99.9 / (99.9 + 927))
=0.09437003 / 0.09728309
=0.9701

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)
=(1505.5 / 3939) / (1606.6 / 4390.4)
=0.3822036 / 0.36593477
=1.0445

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)
=((3012.6 + 1242.3) / 4016.8) / ((1511.9 + 1200) / 3884.7)
=1.05927604 / 0.69809767
=1.5174

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
=(518.8 - 0 - 795.5) / 4016.8
=-0.0689

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.

Mead Johnson Nutrition Co has a M-score of -3.04 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 own currency.

Mead Johnson Nutrition Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.93030.83331.3480.93640.71520.98750.94830.9570.954
GMI 1.00891.01020.95461.03331.00731.01650.97511.03380.9561
AQI 0.94671.04390.80281.13860.84971.5610.8280.98220.7818
SGI 1.09861.11880.98061.11151.17041.0611.07671.04970.9233
DEPI 1.03761.00880.98010.99960.90981.15271.14720.95850.9784
SGAI 1.02341.02121.06591.01281.01590.94391.01470.98591.026
LVGI 0.98231.10942.60410.87610.90260.89930.90460.89251.4774
TATA -0.0353-0.0613-0.0855-0.0141-0.0449-0.0271-0.0228-0.0196-0.0641
M-score -2.63-2.83-3.22-2.39-2.84-2.27-2.60-2.52-3.17

Mead Johnson Nutrition Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.94830.92191.06680.99290.9570.92120.86870.99050.9541.064
GMI 0.96610.9670.97831.01671.03551.03621.01170.97190.95610.9583
AQI 0.8280.7920.73560.8490.98220.94570.990.87450.78180.9862
SGI 1.07671.08181.08421.06181.04971.02670.99530.95950.92330.8972
DEPI 1.14721.11161.1191.05370.95850.94090.92110.95450.97840.9701
SGAI 1.01921.02711.01671.03050.96960.96210.98340.99231.0261.0445
LVGI 0.90460.90920.93710.90460.89250.88620.87561.08411.47741.5174
TATA -0.0353-0.0277-0.0032-0.0177-0.0196-0.0375-0.058-0.0407-0.0641-0.0689
M-score -2.67-2.67-2.45-2.53-2.52-2.67-2.84-2.81-3.17-3.04
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