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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 -2.68.
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 * 1.5919||+||0.528 * 0.9665||+||0.404 * 1.034||+||0.892 * 1.055||+||0.115 * 0.9698|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0318||+||4.679 * -0.0601||-||0.327 * 0.9638|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $4.3 Mil.|
Revenue was 229.034 + 238.942 + 239.155 + 236.52 = $943.7 Mil.
Gross Profit was 91.893 + 93.367 + 100.725 + 99.718 = $385.7 Mil.
Total Current Assets was $170.1 Mil.
Total Assets was $999.4 Mil.
Property, Plant and Equipment(Net PPE) was $351.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.8 Mil.
Selling, General & Admin. Expense(SGA) was $265.1 Mil.
Total Current Liabilities was $167.6 Mil.
Long-Term Debt was $269.0 Mil.
Net Income was 13.903 + 15.231 + 18.872 + 18.799 = $66.8 Mil.
Non Operating Income was -0.022 + 0.193 + 0.097 + 0.106 = $0.4 Mil.
Cash Flow from Operations was 44.763 + 36.264 + 13.856 + 31.621 = $126.5 Mil.
|Accounts Receivable was $2.6 Mil.
Revenue was 219.134 + 236.553 + 221.299 + 217.507 = $894.5 Mil.
Gross Profit was 83.659 + 90.196 + 89.472 + 90.022 = $353.3 Mil.
Total Current Assets was $161.3 Mil.
Total Assets was $907.8 Mil.
Property, Plant and Equipment(Net PPE) was $326.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.7 Mil.
Selling, General & Admin. Expense(SGA) was $243.6 Mil.
Total Current Liabilities was $155.8 Mil.
Long-Term Debt was $255.7 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)|
|=||(4.301 / 943.651)||/||(2.561 / 894.493)|
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)|
|=||(93.367 / 894.493)||/||(91.893 / 943.651)|
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 - (170.075 + 351.582) / 999.438)||/||(1 - (161.342 + 326.752) / 907.794)|
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))|
|=||(35.721 / (35.721 + 326.752))||/||(39.769 / (39.769 + 351.582))|
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)|
|=||(265.114 / 943.651)||/||(243.56 / 894.493)|
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)|
|=||((269.045 + 167.571) / 999.438)||/||((255.688 + 155.793) / 907.794)|
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|
|=||(66.805 - 0.374||-||126.504)||/||999.438|
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 -2.17 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