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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.
During the past 13 years, the highest Beneish M-Score of Monro Muffler Brake Inc was -0.12. The lowest was -3.17. And the median was -2.58.
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 Monro Muffler Brake Inc 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 * 2.3912||+||0.528 * 1.0248||+||0.404 * 1.0892||+||0.892 * 1.0739||+||0.115 * 0.976|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9776||+||4.679 * -0.0698||-||0.327 * 1.0765|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $11 Mil.|
Revenue was 288.283 + 248.584 + 236.894 + 229.034 = $1,003 Mil.
Gross Profit was 105.6 + 99.997 + 98.068 + 91.893 = $396 Mil.
Total Current Assets was $196 Mil.
Total Assets was $1,163 Mil.
Property, Plant and Equipment(Net PPE) was $381 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $273 Mil.
Total Current Liabilities was $182 Mil.
Long-Term Debt was $380 Mil.
Net Income was 17.566 + 17.544 + 16.755 + 13.903 = $66 Mil.
Non Operating Income was 0.165 + 0.126 + 0.154 + -0.033 = $0 Mil.
Cash Flow from Operations was 33.608 + 46.437 + 21.709 + 44.763 = $147 Mil.
|Accounts Receivable was $4 Mil.
Revenue was 238.942 + 239.155 + 236.52 + 219.134 = $934 Mil.
Gross Profit was 93.367 + 100.725 + 99.718 + 83.659 = $377 Mil.
Total Current Assets was $190 Mil.
Total Assets was $1,003 Mil.
Property, Plant and Equipment(Net PPE) was $349 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $260 Mil.
Total Current Liabilities was $161 Mil.
Long-Term Debt was $289 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(11.492 / 1002.795)||/||(4.475 / 933.751)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(377.469 / 933.751)||/||(395.558 / 1002.795)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (195.96 + 381) / 1162.75)||/||(1 - (189.787 + 349.084) / 1002.619)|
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.
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))|
|=||(38.951 / (38.951 + 349.084))||/||(43.677 / (43.677 + 381))|
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)|
|=||(272.805 / 1002.795)||/||(259.846 / 933.751)|
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)|
|=||((380.326 + 182.123) / 1162.75)||/||((289.214 + 161.316) / 1002.619)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(65.768 - 0.412||-||146.517)||/||1162.75|
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.
Monro Muffler Brake Inc has a M-score of -1.44 signals that the company is likely to be a manipulator.
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
Monro Muffler Brake Inc Annual Data
Monro Muffler Brake Inc Quarterly Data