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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 Monster Beverage Corp was -0.13. The lowest was -3.82. And the median was -2.07.
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 Monster Beverage Corp 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 * 1.0454||+||0.528 * 0.9263||+||0.404 * 1.9121||+||0.892 * 1.0963||+||0.115 * 1.0831|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8289||+||4.679 * 0.0945||-||0.327 * 1.239|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was USD 467 Mil.|
Revenue was 787.954 + 827.488 + 680.186 + 645.433 = USD 2,941 Mil.
Gross Profit was 502.975 + 517.814 + 423.098 + 403.361 = USD 1,847 Mil.
Total Current Assets was USD 1,550 Mil.
Total Assets was USD 4,236 Mil.
Property, Plant and Equipment(Net PPE) was USD 145 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 39 Mil.
Selling, General & Admin. Expense(SGA) was USD 785 Mil.
Total Current Liabilities was USD 473 Mil.
Long-Term Debt was USD 0 Mil.
Net Income was 191.643 + 184.219 + 163.877 + 138.742 = USD 678 Mil.
Non Operating Income was 0 + 0 + 0 + 1.039 = USD 1 Mil.
Cash Flow from Operations was 173.147 + 137.996 + 109.559 + -143.748 = USD 277 Mil.
|Accounts Receivable was USD 408 Mil.
Revenue was 756.619 + 693.722 + 626.791 + 605.566 = USD 2,683 Mil.
Gross Profit was 465.476 + 394.508 + 368.957 + 331.783 = USD 1,561 Mil.
Total Current Assets was USD 3,751 Mil.
Total Assets was USD 5,604 Mil.
Property, Plant and Equipment(Net PPE) was USD 95 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 28 Mil.
Selling, General & Admin. Expense(SGA) was USD 864 Mil.
Total Current Liabilities was USD 505 Mil.
Long-Term Debt was USD 0 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)|
|=||(467.348 / 2941.061)||/||(407.771 / 2682.698)|
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)|
|=||(1560.724 / 2682.698)||/||(1847.248 / 2941.061)|
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 - (1550.024 + 144.625) / 4236.431)||/||(1 - (3750.647 + 94.727) / 5603.738)|
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))|
|=||(28.284 / (28.284 + 94.727))||/||(38.977 / (38.977 + 144.625))|
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)|
|=||(785.189 / 2941.061)||/||(864.067 / 2682.698)|
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)|
|=||((0 + 472.642) / 4236.431)||/||((0 + 504.606) / 5603.738)|
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|
|=||(678.481 - 1.039||-||276.954)||/||4236.431|
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.
Monster Beverage Corp has a M-score of -1.62 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
Monster Beverage Corp Annual Data
Monster Beverage Corp Quarterly Data