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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 * 1.0403||+||0.528 * 0.8934||+||0.404 * 0.9148||+||0.892 * 0.9492||+||0.115 * 0.9631|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0214||+||4.679 * -0.0284||-||0.327 * 0.9232|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $296 Mil.|
Revenue was 506.584 + 544.071 + 532.809 + 471.983 = $2,055 Mil.
Gross Profit was 81.916 + 88.011 + 86.167 + 60.647 = $317 Mil.
Total Current Assets was $874 Mil.
Total Assets was $1,426 Mil.
Property, Plant and Equipment(Net PPE) was $289 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $135 Mil.
Total Current Liabilities was $202 Mil.
Long-Term Debt was $214 Mil.
Net Income was 25.978 + 27.797 + 28.63 + 14.435 = $97 Mil.
Non Operating Income was 1.242 + 0.515 + 0.245 + 0.625 = $3 Mil.
Cash Flow from Operations was 28.721 + 31.529 + 10.336 + 64.141 = $135 Mil.
|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 $139 Mil.
Total Current Liabilities was $230 Mil.
Long-Term Debt was $205 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)|
|=||(295.672 / 2055.447)||/||(299.417 / 2165.361)|
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)|
|=||(298.106 / 2165.361)||/||(316.741 / 2055.447)|
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 - (873.594 + 289.074) / 1426.121)||/||(1 - (825.499 + 270.655) / 1373.526)|
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))|
|=||(32.979 / (32.979 + 270.655))||/||(36.743 / (36.743 + 289.074))|
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)|
|=||(134.573 / 2055.447)||/||(138.803 / 2165.361)|
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)|
|=||((213.847 + 202.2) / 1426.121)||/||((204.5 + 229.541) / 1373.526)|
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|
|=||(96.84 - 2.627||-||134.727)||/||1426.121|
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 -2.69 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