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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 Mueller Industries Inc was -1.43. The lowest was -4.05. And the median was -2.51.
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 Mueller Industries Inc 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 * 0.9625||+||0.528 * 0.9978||+||0.404 * 1.7036||+||0.892 * 0.9355||+||0.115 * 1.1086|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0641||+||4.679 * -0.0653||-||0.327 * 0.9561|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $299 Mil.|
Revenue was 535.184 + 555.593 + 537.242 + 537.342 = $2,165 Mil.
Gross Profit was 68.017 + 85.228 + 76.408 + 68.453 = $298 Mil.
Total Current Assets was $825 Mil.
Total Assets was $1,374 Mil.
Property, Plant and Equipment(Net PPE) was $271 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $230 Mil.
Long-Term Debt was $205 Mil.
Net Income was 17.8 + 33.651 + 21.978 + 17.986 = $91 Mil.
Non Operating Income was 0.164 + 0.265 + 0.105 + -1.256 = $-1 Mil.
Cash Flow from Operations was 78.318 + 13.26 + 3.89 + 86.401 = $182 Mil.
|Accounts Receivable was $333 Mil.
Revenue was 602.82 + 649.691 + 574.374 + 487.715 = $2,315 Mil.
Gross Profit was 81.542 + 91.916 + 78.597 + 65.903 = $318 Mil.
Total Current Assets was $924 Mil.
Total Assets was $1,328 Mil.
Property, Plant and Equipment(Net PPE) was $246 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $138 Mil.
Total Current Liabilities was $233 Mil.
Long-Term Debt was $206 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)|
|=||(299.417 / 2165.361)||/||(332.508 / 2314.6)|
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)|
|=||(85.228 / 2314.6)||/||(68.017 / 2165.361)|
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 - (825.499 + 270.655) / 1373.526)||/||(1 - (924.178 + 246.169) / 1327.736)|
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))|
|=||(33.699 / (33.699 + 246.169))||/||(32.979 / (32.979 + 270.655))|
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)|
|=||(137.386 / 2165.361)||/||(138.003 / 2314.6)|
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)|
|=||((204.5 + 229.541) / 1373.526)||/||((205.5 + 233.323) / 1327.736)|
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|
|=||(91.415 - -0.722||-||181.869)||/||1373.526|
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.
Mueller Industries Inc has a M-score of -2.58 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
Mueller Industries Inc Annual Data
Mueller Industries Inc Quarterly Data