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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 -3.49. And the median was -2.55.
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 * 0.9238||+||0.528 * 1.0131||+||0.404 * 1.03||+||0.892 * 1.0953||+||0.115 * 0.9699|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9409||+||4.679 * 0.0089||-||0.327 * 0.9788|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $275 Mil.|
Revenue was 537.342 + 602.82 + 649.691 + 574.374 = $2,364 Mil.
Gross Profit was 68.453 + 81.542 + 91.916 + 78.597 = $321 Mil.
Total Current Assets was $941 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 $139 Mil.
Total Current Liabilities was $238 Mil.
Long-Term Debt was $205 Mil.
Net Income was 17.986 + 23.823 + 35.045 + 24.706 = $102 Mil.
Non Operating Income was -1.256 + 0.225 + 0.127 + 0.088 = $-1 Mil.
Cash Flow from Operations was 86.401 + 55.085 + -6.209 + -44.672 = $91 Mil.
|Accounts Receivable was $272 Mil.
Revenue was 487.715 + 528.854 + 582.282 + 559.69 = $2,159 Mil.
Gross Profit was 65.903 + 72.552 + 81.157 + 76.84 = $296 Mil.
Total Current Assets was $875 Mil.
Total Assets was $1,248 Mil.
Property, Plant and Equipment(Net PPE) was $244 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $135 Mil.
Total Current Liabilities was $219 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)|
|=||(275.065 / 2364.227)||/||(271.847 / 2158.541)|
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)|
|=||(81.542 / 2158.541)||/||(68.453 / 2364.227)|
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 - (941.213 + 245.91) / 1328.096)||/||(1 - (874.717 + 244.457) / 1247.767)|
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))|
|=||(32.394 / (32.394 + 244.457))||/||(33.735 / (33.735 + 245.91))|
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)|
|=||(139.036 / 2364.227)||/||(134.914 / 2158.541)|
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)|
|=||((205.25 + 238.069) / 1328.096)||/||((206.25 + 219.256) / 1247.767)|
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|
|=||(101.56 - -0.816||-||90.605)||/||1328.096|
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 -2.39 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