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Mead Johnson Nutrition Co (NYSE:MJN)
Beneish M-Score
-2.91 (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 -2.91 suggests that the company is not a manipulator.

MJN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.22   Max: -2.11
Current: -2.91

-3.22
-2.11

During the past 13 years, the highest Beneish M-Score of Mead Johnson Nutrition Co was -2.11. The lowest was -3.22. And the median was -2.58.


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 * 1.068+0.528 * 0.9765+0.404 * 1.0939+0.892 * 0.8925+0.115 * 0.9857
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0141+4.679 * -0.0542-0.327 * 1.5023
=-2.91

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $373 Mil.
Revenue was 941.5 + 962.1 + 967 + 977.5 = $3,848 Mil.
Gross Profit was 608.3 + 614.5 + 608.4 + 630.7 = $2,462 Mil.
Total Current Assets was $2,620 Mil.
Total Assets was $4,029 Mil.
Property, Plant and Equipment(Net PPE) was $925 Mil.
Depreciation, Depletion and Amortization(DDA) was $100 Mil.
Selling, General & Admin. Expense(SGA) was $1,457 Mil.
Total Current Liabilities was $1,161 Mil.
Long-Term Debt was $3,022 Mil.
Net Income was 155.1 + 72.7 + 128 + 155.2 = $511 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 116 + 160.1 + 301 + 152.4 = $730 Mil.
Accounts Receivable was $391 Mil.
Revenue was 1032.4 + 1094.4 + 1094.2 + 1090.7 = $4,312 Mil.
Gross Profit was 676 + 700.9 + 664 + 652.8 = $2,694 Mil.
Total Current Assets was $2,617 Mil.
Total Assets was $3,959 Mil.
Property, Plant and Equipment(Net PPE) was $908 Mil.
Depreciation, Depletion and Amortization(DDA) was $96 Mil.
Selling, General & Admin. Expense(SGA) was $1,610 Mil.
Total Current Liabilities was $1,230 Mil.
Long-Term Debt was $1,506 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)
=(372.5 / 3848.1) / (390.8 / 4311.7)
=0.09680102 / 0.0906371
=1.068

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)
=(2693.7 / 4311.7) / (2461.9 / 3848.1)
=0.62474198 / 0.63977028
=0.9765

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 - (2619.9 + 925.4) / 4028.6) / (1 - (2616.7 + 908.2) / 3959.1)
=0.11996723 / 0.10967139
=1.0939

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
=3848.1 / 4311.7
=0.8925

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))
=(96.2 / (96.2 + 908.2)) / (99.6 / (99.6 + 925.4))
=0.09577857 / 0.09717073
=0.9857

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)
=(1457.3 / 3848.1) / (1610.1 / 4311.7)
=0.37870637 / 0.37342579
=1.0141

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)
=((3021.9 + 1160.5) / 4028.6) / ((1506.2 + 1229.7) / 3959.1)
=1.03817703 / 0.69104089
=1.5023

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
=(511 - 0 - 729.5) / 4028.6
=-0.0542

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 -2.91 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 0.93030.83331.3480.93640.81950.86180.94830.9570.954
GMI 1.00891.01020.95461.03331.00731.01650.97511.03380.9561
AQI 0.94671.04390.80281.13860.84971.5610.8280.83930.9149
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 0.98231.10942.60410.87610.90260.89930.90460.89361.4757
TATA -0.0381-0.0699-0.0855-0.0141-0.0449-0.0271-0.0228-0.0195-0.0641
M-score -2.65-2.87-3.22-2.39-2.74-2.38-2.60-2.58-3.11

Mead Johnson Nutrition Co Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.92191.06680.99290.9570.92120.86870.99050.9541.0641.068
GMI 0.97140.98091.01681.03381.03681.01310.97450.95610.95830.9765
AQI 0.7920.73560.8490.83930.94570.990.87450.91490.98621.0939
SGI 1.08181.08421.06181.04971.02670.99530.95950.92330.89720.8925
DEPI 1.11161.1191.05370.95850.94090.92110.95450.97840.97010.9857
SGAI 10.99470.99570.99560.99351.01291.02661.0261.04451.0141
LVGI 0.90920.93710.90460.89360.88620.87561.08411.47571.51741.5023
TATA -0.01020.0096-0.0086-0.0195-0.0375-0.058-0.0407-0.0641-0.0689-0.0542
M-score -2.58-2.38-2.49-2.58-2.68-2.84-2.82-3.11-3.04-2.91
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