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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 -2.00.
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 * 1.4496||+||0.528 * 0.9414||+||0.404 * 1.8233||+||0.892 * 1.12||+||0.115 * 1.2622|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8497||+||4.679 * 0.0039||-||0.327 * 1.5385|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $573 Mil.|
Revenue was 753.765 + 787.954 + 827.488 + 680.186 = $3,049 Mil.
Gross Profit was 498.113 + 502.975 + 517.814 + 423.098 = $1,942 Mil.
Total Current Assets was $1,432 Mil.
Total Assets was $4,153 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $857 Mil.
Total Current Liabilities was $471 Mil.
Long-Term Debt was $0 Mil.
Net Income was 172.946 + 191.643 + 184.219 + 163.877 = $713 Mil.
Non Operating Income was -5.002 + 0 + 0 + 0 = $-5 Mil.
Cash Flow from Operations was 280.653 + 173.147 + 137.996 + 109.559 = $701 Mil.
|Accounts Receivable was $353 Mil.
Revenue was 645.433 + 756.619 + 693.722 + 626.791 = $2,723 Mil.
Gross Profit was 403.361 + 465.476 + 394.508 + 368.957 = $1,632 Mil.
Total Current Assets was $3,600 Mil.
Total Assets was $5,571 Mil.
Property, Plant and Equipment(Net PPE) was $97 Mil.
Depreciation, Depletion and Amortization(DDA) was $31 Mil.
Selling, General & Admin. Expense(SGA) was $900 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $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)|
|=||(573.051 / 3049.393)||/||(352.955 / 2722.565)|
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)|
|=||(1632.302 / 2722.565)||/||(1942 / 3049.393)|
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 - (1432.27 + 173.343) / 4153.471)||/||(1 - (3599.532 + 97.354) / 5571.277)|
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))|
|=||(30.86 / (30.86 + 97.354))||/||(40.845 / (40.845 + 173.343))|
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)|
|=||(856.661 / 3049.393)||/||(900.118 / 2722.565)|
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 + 470.589) / 4153.471)||/||((0 + 410.277) / 5571.277)|
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|
|=||(712.685 - -5.002||-||701.355)||/||4153.471|
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 -1.76 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