Switch to:
3M Co (NYSE:MMM)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

MMM' s 10-Year Beneish M-Score Range
Min: -3.22   Max: -2.33
Current: -2.76

-3.22
-2.33

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.33. The lowest was -3.22. And the median was -2.63.


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 * 0.9937+0.528 * 0.9842+0.404 * 1.0013+0.892 * 1.032+0.115 * 0.9629
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9855+4.679 * -0.0475-0.327 * 1.2082
=-2.76

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $4,711 Mil.
Revenue was 8137 + 8134 + 7831 + 7569 = $31,671 Mil.
Gross Profit was 3932 + 3950 + 3800 + 3593 = $15,275 Mil.
Total Current Assets was $12,681 Mil.
Total Assets was $32,776 Mil.
Property, Plant and Equipment(Net PPE) was $8,499 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,415 Mil.
Selling, General & Admin. Expense(SGA) was $6,451 Mil.
Total Current Liabilities was $7,705 Mil.
Long-Term Debt was $5,225 Mil.
Net Income was 1303 + 1267 + 1207 + 1103 = $4,880 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1711 + 1640 + 1092 + 1993 = $6,436 Mil.
Accounts Receivable was $4,594 Mil.
Revenue was 7916 + 7752 + 7634 + 7387 = $30,689 Mil.
Gross Profit was 3768 + 3739 + 3665 + 3396 = $14,568 Mil.
Total Current Assets was $13,282 Mil.
Total Assets was $33,604 Mil.
Property, Plant and Equipment(Net PPE) was $8,448 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,346 Mil.
Selling, General & Admin. Expense(SGA) was $6,343 Mil.
Total Current Liabilities was $7,439 Mil.
Long-Term Debt was $3,533 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)
=(4711 / 31671) / (4594 / 30689)
=0.14874807 / 0.14969533
=0.9937

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)
=(3950 / 30689) / (3932 / 31671)
=0.47469777 / 0.48230242
=0.9842

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 - (12681 + 8499) / 32776) / (1 - (13282 + 8448) / 33604)
=0.35379546 / 0.35335079
=1.0013

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
=31671 / 30689
=1.032

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))
=(1346 / (1346 + 8448)) / (1415 / (1415 + 8499))
=0.13743108 / 0.14272746
=0.9629

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)
=(6451 / 31671) / (6343 / 30689)
=0.20368792 / 0.20668643
=0.9855

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)
=((5225 + 7705) / 32776) / ((3533 + 7439) / 33604)
=0.39449597 / 0.32650875
=1.2082

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
=(4880 - 0 - 6436) / 32776
=-0.0475

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 -2.76 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93730.9611.00931.01560.921.11160.96470.96321.03991.0145
GMI 0.97680.98591.0421.02011.01880.98790.98981.02390.98850.9942
AQI 1.24911.25520.7951.10771.05880.97811.0191.04760.94591.035
SGI 1.09761.05781.0831.06711.0330.91511.15311.11061.00991.0323
DEPI 0.98510.99340.97031.10280.97651.01121.06370.96041.0420.9742
SGAI 0.97720.98971.03150.92771.01251.02240.96841.0140.97931.0134
LVGI 0.84770.97091.230.96611.13160.8560.92730.92051.04361.0724
TATA -0.0624-0.05160.0006-0.0072-0.042-0.0641-0.0361-0.0317-0.0253-0.0345
M-score -2.60-2.60-2.54-2.35-2.73-2.72-2.51-2.51-2.59-2.62

3M Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.95941.02211.03991.01291.01911.00521.01451.00671.00850.9937
GMI 1.00360.99120.98850.98910.99761.00240.99420.99130.98750.9842
AQI 1.00521.02590.94590.97780.99991.01141.0351.03991.0281.0013
SGI 1.03731.01281.00991.00891.02131.03661.03231.03381.0391.032
DEPI 0.94470.99851.0421.02661.02531.00550.97420.98450.98380.9629
SGAI 0.99920.98670.97930.98310.99281.0051.01341.01270.99990.9855
LVGI 1.02960.95881.04361.02460.96440.98351.07241.1131.10721.2082
TATA -0.0295-0.0259-0.0253-0.0299-0.0374-0.0302-0.0345-0.0351-0.0315-0.0475
M-score -2.63-2.55-2.59-2.62-2.60-2.57-2.62-2.64-2.62-2.76
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK