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GuruFocus has detected 2 Warning Signs with Mueller Industries Inc $MLI.
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Mueller Industries Inc (NYSE:MLI)
Beneish M-Score
-2.74 (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.

Mueller Industries Inc has a M-score of -2.74 suggests that the company is not a manipulator.

MLI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.51   Max: -1.43
Current: -2.74

-3.51
-1.43

During the past 13 years, the highest Beneish M-Score of Mueller Industries Inc was -1.43. The lowest was -3.51. And the median was -2.55.


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 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 * 1.0408+0.528 * 0.8556+0.404 * 0.924+0.892 * 0.9789+0.115 * 1.0337
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0498+4.679 * -0.0384-0.327 * 0.9675
=-2.74

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $256 Mil.
Revenue was 472.158 + 506.584 + 544.071 + 532.809 = $2,056 Mil.
Gross Profit was 76.029 + 81.916 + 88.011 + 86.167 = $332 Mil.
Total Current Assets was $894 Mil.
Total Assets was $1,447 Mil.
Property, Plant and Equipment(Net PPE) was $295 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $219 Mil.
Long-Term Debt was $214 Mil.
Net Income was 17.322 + 25.978 + 27.797 + 28.63 = $100 Mil.
Non Operating Income was -4.41 + 1.242 + 0.515 + 0.245 = $-2 Mil.
Cash Flow from Operations was 87.191 + 28.721 + 31.529 + 10.336 = $158 Mil.
Accounts Receivable was $252 Mil.
Revenue was 471.983 + 535.184 + 555.593 + 537.242 = $2,100 Mil.
Gross Profit was 60.647 + 68.017 + 85.228 + 76.408 = $290 Mil.
Total Current Assets was $800 Mil.
Total Assets was $1,339 Mil.
Property, Plant and Equipment(Net PPE) was $280 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $134 Mil.
Total Current Liabilities was $209 Mil.
Long-Term Debt was $204 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)
=(256.291 / 2055.622) / (251.571 / 2100.002)
=0.12467808 / 0.1197956
=1.0408

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)
=(290.3 / 2100.002) / (332.123 / 2055.622)
=0.13823796 / 0.16156813
=0.8556

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 - (894.323 + 295.231) / 1447.476) / (1 - (800.401 + 280.224) / 1338.801)
=0.17818741 / 0.19284121
=0.924

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
=2055.622 / 2100.002
=0.9789

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))
=(34.608 / (34.608 + 280.224)) / (35.133 / (35.133 + 295.231))
=0.10992529 / 0.10634633
=1.0337

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)
=(137.499 / 2055.622) / (133.8 / 2100.002)
=0.06688924 / 0.06371423
=1.0498

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)
=((213.709 + 218.992) / 1447.476) / ((204.25 + 209.429) / 1338.801)
=0.29893484 / 0.30899215
=0.9675

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
=(99.727 - -2.408 - 157.777) / 1447.476
=-0.0384

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 -2.74 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 local exchange's currency.

Mueller Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.06730.71511.72680.88420.79111.19711.01740.92381.02971.0408
GMI 1.15671.08710.89351.02871.10720.95860.94921.01310.98070.8556
AQI 0.98810.92380.80170.90850.93411.28860.91991.031.81670.924
SGI 1.07440.94830.60481.33131.17380.90580.98571.09530.88820.9789
DEPI 0.93030.90370.97580.95560.97621.2881.01670.96991.09741.0337
SGAI 0.9461.00741.40930.84480.88271.06651.04230.94091.08341.0498
LVGI 0.95810.71570.95030.96960.97751.53830.8080.97880.92570.9675
TATA -0.0502-0.0928-0.06140.0264-0.0515-0.02390.03250.0089-0.0545-0.0398
M-score -2.49-3.13-2.64-2.16-2.70-2.55-2.33-2.39-2.47-2.75

Mueller Industries Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.99840.92380.89910.83870.96251.02970.99471.06561.04031.0408
GMI 0.99021.01311.00320.98810.99780.98070.95530.96040.89340.8556
AQI 1.31631.030.87430.96981.70361.81671.8361.58890.91480.924
SGI 1.06431.09531.07080.99660.93550.88820.90050.93330.94920.9789
DEPI 1.05360.96990.96991.03941.10861.09741.06381.03370.96311.0337
SGAI 0.97350.94090.96091.0431.07511.08341.08721.01821.02141.0498
LVGI 0.92440.97880.94140.87730.95610.92570.92680.98650.92320.9675
TATA 0.02750.0089-0.0298-0.045-0.0653-0.0545-0.0535-0.0684-0.0284-0.0384
M-score -2.14-2.39-2.68-2.82-2.58-2.47-2.49-2.58-2.69-2.74
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