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3M Co (NYSE:MMM)
Beneish M-Score
-2.80 (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.

3M Co has a M-score of -2.80 suggests that the company is not a manipulator.

MMM' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -2.35
Current: -2.8

-3.08
-2.35

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.35. The lowest was -3.08. And the median was -2.66.


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 3M 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 * 0.9667+0.528 * 0.9899+0.404 * 0.9715+0.892 * 1.0308+0.115 * 0.9615
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9831+4.679 * -0.0534-0.327 * 1.1548
=-2.80

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $4,238 Mil.
Revenue was 7719 + 8137 + 8134 + 7831 = $31,821 Mil.
Gross Profit was 3692 + 3932 + 3950 + 3800 = $15,374 Mil.
Total Current Assets was $11,765 Mil.
Total Assets was $31,269 Mil.
Property, Plant and Equipment(Net PPE) was $8,489 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,408 Mil.
Selling, General & Admin. Expense(SGA) was $6,469 Mil.
Total Current Liabilities was $5,998 Mil.
Long-Term Debt was $6,790 Mil.
Net Income was 1179 + 1303 + 1267 + 1207 = $4,956 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2183 + 1711 + 1640 + 1092 = $6,626 Mil.
Accounts Receivable was $4,253 Mil.
Revenue was 7569 + 7916 + 7752 + 7634 = $30,871 Mil.
Gross Profit was 3593 + 3768 + 3739 + 3665 = $14,765 Mil.
Total Current Assets was $12,733 Mil.
Total Assets was $33,550 Mil.
Property, Plant and Equipment(Net PPE) was $8,652 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,371 Mil.
Selling, General & Admin. Expense(SGA) was $6,384 Mil.
Total Current Liabilities was $7,498 Mil.
Long-Term Debt was $4,384 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)
=(4238 / 31821) / (4253 / 30871)
=0.13318249 / 0.13776684
=0.9667

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)
=(3932 / 30871) / (3692 / 31821)
=0.47828059 / 0.48314006
=0.9899

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 - (11765 + 8489) / 31269) / (1 - (12733 + 8652) / 33550)
=0.35226582 / 0.36259314
=0.9715

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
=31821 / 30871
=1.0308

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))
=(1371 / (1371 + 8652)) / (1408 / (1408 + 8489))
=0.13678539 / 0.14226533
=0.9615

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)
=(6469 / 31821) / (6384 / 30871)
=0.20329342 / 0.20679602
=0.9831

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)
=((6790 + 5998) / 31269) / ((4384 + 7498) / 33550)
=0.40896735 / 0.35415797
=1.1548

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
=(4956 - 0 - 6626) / 31269
=-0.0534

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.

3M Co has a M-score of -2.80 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.

3M Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.9611.00931.01560.921.11160.96470.96321.03991.01450.9667
GMI 0.98841.03941.02011.01880.98790.98981.02390.98850.99420.9899
AQI 1.2580.79321.10771.07720.96141.0191.04760.94591.0350.9715
SGI 1.05781.0831.06711.0330.91511.15311.11061.00991.03231.0308
DEPI 0.99340.97031.10280.97651.01121.06370.96041.0420.97420.9615
SGAI 1.02271.01010.92771.01251.02240.96841.0140.97931.01340.9831
LVGI 0.96951.23170.96611.12080.86420.92730.92051.04361.07241.1548
TATA -0.05320.0006-0.0072-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0534
M-score -2.61-2.54-2.35-2.72-2.73-2.51-2.51-2.59-2.62-2.80

3M Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.02211.03991.01291.01911.00521.01451.00671.00850.99370.9667
GMI 0.99120.98850.98910.99761.00240.99420.99130.98750.98420.9899
AQI 1.02590.94590.97780.99991.01141.0351.03991.0281.00130.9715
SGI 1.01281.00991.00891.02131.03661.03231.03381.0391.0321.0308
DEPI 0.99851.0421.02661.02531.00550.97420.98450.98380.96290.9615
SGAI 0.98670.97930.98310.99281.0051.01341.01270.99990.98550.9831
LVGI 0.95881.04361.02460.96440.98351.07241.1131.10721.20821.1548
TATA -0.0259-0.0253-0.0299-0.0374-0.0302-0.0345-0.0351-0.0315-0.0475-0.0534
M-score -2.55-2.59-2.62-2.60-2.57-2.62-2.64-2.62-2.76-2.80
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