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3M Co (NYSE:MMM)
Beneish M-Score
-2.62 (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 -2.62 suggests that the company is not a manipulator.

MMM' s 10-Year Beneish M-Score Range
Min: -3.01   Max: -2.28
Current: -2.62

-3.01
-2.28

During the past 13 years, the highest Beneish M-Score of 3M Co was -2.28. The lowest was -3.01. 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 * 1.0145+0.528 * 0.9942+0.404 * 1.035+0.892 * 1.0323+0.115 * 0.9742
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0134+4.679 * -0.0345-0.327 * 1.074
=-2.62

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
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 $4,326 Mil.
Net Income was 1103 + 1230 + 1197 + 1129 = $4,659 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1993 + 1151 + 1679 + 994 = $5,817 Mil.
Accounts Receivable was $4,061 Mil.
Revenue was 7387 + 7497 + 7534 + 7486 = $29,904 Mil.
Gross Profit was 3396 + 3562 + 3664 + 3597 = $14,219 Mil.
Total Current Assets was $13,630 Mil.
Total Assets was $33,876 Mil.
Property, Plant and Equipment(Net PPE) was $8,378 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,288 Mil.
Selling, General & Admin. Expense(SGA) was $6,102 Mil.
Total Current Liabilities was $6,200 Mil.
Long-Term Debt was $4,916 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)
=(4253 / 30871) / (4061 / 29904)
=0.13776684 / 0.13580123
=1.0145

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)
=(3768 / 29904) / (3593 / 30871)
=0.47548823 / 0.47828059
=0.9942

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 - (12733 + 8652) / 33550) / (1 - (13630 + 8378) / 33876)
=0.36259314 / 0.35033652
=1.035

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
=30871 / 29904
=1.0323

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))
=(1288 / (1288 + 8378)) / (1371 / (1371 + 8652))
=0.13325057 / 0.13678539
=0.9742

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)
=(6384 / 30871) / (6102 / 29904)
=0.20679602 / 0.20405297
=1.0134

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)
=((4326 + 7498) / 33550) / ((4916 + 6200) / 33876)
=0.35242921 / 0.32813791
=1.074

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
=(4659 - 0 - 5817) / 33550
=-0.0345

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 -2.62 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 0.80450.9611.00931.08210.89861.06820.98920.96571.01141.0145
GMI 0.98110.9841.03941.02011.01880.98790.98981.02390.98850.9942
AQI 1.24911.2580.79321.10771.07720.96141.0191.04760.94591.035
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 1.00090.98671.01010.92771.01251.02240.96841.0140.97931.0134
LVGI 0.84750.97091.23320.97361.12080.85510.93730.92051.0371.074
TATA -0.0659-0.05190.0039-0.0041-0.0416-0.0641-0.0361-0.0317-0.0253-0.0345
M-score -2.74-2.60-2.52-2.28-2.74-2.77-2.49-2.51-2.61-2.62

3M Co Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.9820.96570.95260.95941.02211.01141.01291.01911.00521.0145
GMI 1.0271.02391.01851.00360.99120.98850.98910.99761.00240.9942
AQI 1.12491.04761.011.00521.02590.94590.97780.99991.01141.035
SGI 1.1211.11061.07821.03731.01281.00991.00891.02131.03661.0323
DEPI 1.02180.96040.93070.94470.99851.0421.02661.02531.00550.9742
SGAI 1.02571.0141.0090.99920.98670.97930.98310.99281.0051.0134
LVGI 0.99140.92050.92851.02960.95881.0371.02460.96440.98351.074
TATA -0.0286-0.0317-0.0329-0.0295-0.0259-0.0253-0.0299-0.0374-0.0302-0.0345
M-score -2.46-2.51-2.58-2.63-2.55-2.61-2.62-2.60-2.57-2.62
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