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3M Co (NYSE:MMM)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

MMM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -2.34
Current: -2.71

-3.08
-2.34

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.34. 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 * 1.0303+0.528 * 0.9822+0.404 * 1.2103+0.892 * 0.9514+0.115 * 0.9864
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0045+4.679 * -0.0485-0.327 * 1.1929
=-2.71

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $4,154 Mil.
Revenue was 7298 + 7712 + 7686 + 7578 = $30,274 Mil.
Gross Profit was 3471 + 3835 + 3828 + 3757 = $14,891 Mil.
Total Current Assets was $10,986 Mil.
Total Assets was $32,718 Mil.
Property, Plant and Equipment(Net PPE) was $8,515 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,435 Mil.
Selling, General & Admin. Expense(SGA) was $6,182 Mil.
Total Current Liabilities was $7,118 Mil.
Long-Term Debt was $8,799 Mil.
Net Income was 1038 + 1296 + 1300 + 1199 = $4,833 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2338 + 1664 + 1338 + 1080 = $6,420 Mil.
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 $12,303 Mil.
Total Assets was $31,209 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 $5,964 Mil.
Long-Term Debt was $6,764 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)
=(4154 / 30274) / (4238 / 31821)
=0.13721345 / 0.13318249
=1.0303

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)
=(3835 / 31821) / (3471 / 30274)
=0.48314006 / 0.49187422
=0.9822

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 - (10986 + 8515) / 32718) / (1 - (12303 + 8489) / 31209)
=0.40396724 / 0.33378192
=1.2103

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
=30274 / 31821
=0.9514

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))
=(1408 / (1408 + 8489)) / (1435 / (1435 + 8515))
=0.14226533 / 0.14422111
=0.9864

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)
=(6182 / 30274) / (6469 / 31821)
=0.20420163 / 0.20329342
=1.0045

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)
=((8799 + 7118) / 32718) / ((6764 + 5964) / 31209)
=0.48649062 / 0.40783107
=1.1929

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
=(4833 - 0 - 6420) / 32718
=-0.0485

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 -2.71 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00931.01560.921.11160.96470.96321.03991.01450.96671.0303
GMI 1.03941.02011.01880.98790.98981.02390.98850.99420.98990.9822
AQI 0.79321.10771.07720.96141.0191.04760.94591.0350.92051.2103
SGI 1.0831.06711.0330.91511.15311.11061.00991.03231.03080.9514
DEPI 0.97031.10280.97651.01121.06370.96041.0420.97420.96150.9864
SGAI 1.01010.92771.01251.02240.96841.0140.97931.01340.98311.0045
LVGI 1.23170.96611.12080.86420.92730.92051.04361.07241.15161.1929
TATA 0.0006-0.0061-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345-0.0535-0.0485
M-score -2.54-2.34-2.72-2.73-2.51-2.51-2.59-2.62-2.82-2.71

3M Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.01451.00671.00850.99370.96670.94350.97221.00971.03031.0669
GMI 0.99420.99130.98750.98420.98990.98750.98310.97960.98220.9836
AQI 1.0351.03991.0281.00130.92050.88620.85641.12011.21031.2742
SGI 1.03231.03381.0391.0321.03081.01610.98950.96920.95140.9537
DEPI 0.97420.98450.98380.96290.96150.95850.98571.01370.98641.2782
SGAI 1.01341.01270.99990.98550.98310.98020.98590.99771.00451.0011
LVGI 1.07241.1131.10721.20821.15161.06611.18411.221.19291.2965
TATA -0.0345-0.0351-0.0315-0.0475-0.0535-0.0544-0.0424-0.0388-0.0485-0.0513
M-score -2.62-2.64-2.62-2.76-2.82-2.85-2.84-2.71-2.71-2.66
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