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3M Co (NYSE:MMM)
Beneish M-Score
-2.85 (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 -2.85 suggests that the company is not a manipulator.

MMM' s 10-Year Beneish M-Score Range
Min: -3.29   Max: -2.33
Current: -2.85

-3.29
-2.33

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.33. The lowest was -3.29. And the median was -2.64.


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 * 0.9435+0.528 * 0.9875+0.404 * 0.8862+0.892 * 1.0161+0.115 * 0.9585
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9802+4.679 * -0.0544-0.327 * 1.0661
=-2.85

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $4,408 Mil.
Revenue was 7578 + 7719 + 8137 + 8134 = $31,568 Mil.
Gross Profit was 3757 + 3692 + 3932 + 3950 = $15,331 Mil.
Total Current Assets was $12,518 Mil.
Total Assets was $30,643 Mil.
Property, Plant and Equipment(Net PPE) was $8,286 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,397 Mil.
Selling, General & Admin. Expense(SGA) was $6,401 Mil.
Total Current Liabilities was $5,082 Mil.
Long-Term Debt was $6,459 Mil.
Net Income was 1199 + 1179 + 1303 + 1267 = $4,948 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1080 + 2183 + 1711 + 1640 = $6,614 Mil.
Accounts Receivable was $4,598 Mil.
Revenue was 7831 + 7569 + 7916 + 7752 = $31,068 Mil.
Gross Profit was 3800 + 3593 + 3768 + 3739 = $14,900 Mil.
Total Current Assets was $12,762 Mil.
Total Assets was $33,547 Mil.
Property, Plant and Equipment(Net PPE) was $8,630 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,385 Mil.
Selling, General & Admin. Expense(SGA) was $6,427 Mil.
Total Current Liabilities was $7,450 Mil.
Long-Term Debt was $4,401 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)
=(4408 / 31568) / (4598 / 31068)
=0.13963507 / 0.14799794
=0.9435

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)
=(3692 / 31068) / (3757 / 31568)
=0.47959315 / 0.48565003
=0.9875

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 - (12518 + 8286) / 30643) / (1 - (12762 + 8630) / 33547)
=0.32108475 / 0.36232748
=0.8862

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
=31568 / 31068
=1.0161

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))
=(1385 / (1385 + 8630)) / (1397 / (1397 + 8286))
=0.13829256 / 0.14427347
=0.9585

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)
=(6401 / 31568) / (6427 / 31068)
=0.20276863 / 0.2068688
=0.9802

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)
=((6459 + 5082) / 30643) / ((4401 + 7450) / 33547)
=0.37662761 / 0.35326557
=1.0661

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
=(4948 - 0 - 6614) / 30643
=-0.0544

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 -2.85 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.03991.01291.01911.00521.01451.00671.00850.99370.96670.9435
GMI 0.98850.98910.99761.00240.99420.99130.98750.98420.98990.9875
AQI 0.94590.97780.99991.01141.0351.03991.0281.00130.97150.8862
SGI 1.00991.00891.02131.03661.03231.03381.0391.0321.03081.0161
DEPI 1.0421.02661.02531.00550.97420.98450.98380.96290.96150.9585
SGAI 0.97930.98310.99281.0051.01341.01270.99990.98550.98310.9802
LVGI 1.04361.02460.96440.98351.07241.1131.10721.20821.15481.0661
TATA -0.0253-0.0299-0.0374-0.0302-0.0345-0.0351-0.0315-0.0475-0.0534-0.0544
M-score -2.59-2.62-2.60-2.57-2.62-2.64-2.62-2.76-2.80-2.85
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