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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 -0.12. The lowest was -3.90. And the median was -2.08.
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 * 0.8756||+||0.528 * 0.9606||+||0.404 * 0.7619||+||0.892 * 1.0972||+||0.115 * 0.9266|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8997||+||4.679 * -0.0528||-||0.327 * 0.8247|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $280 Mil.|
Revenue was 605.566 + 635.972 + 687.199 + 536.129 = $2,465 Mil.
Gross Profit was 331.783 + 341.92 + 379.288 + 286.818 = $1,340 Mil.
Total Current Assets was $1,693 Mil.
Total Assets was $1,939 Mil.
Property, Plant and Equipment(Net PPE) was $90 Mil.
Depreciation, Depletion and Amortization(DDA) was $26 Mil.
Selling, General & Admin. Expense(SGA) was $592 Mil.
Total Current Liabilities was $356 Mil.
Long-Term Debt was $0 Mil.
Net Income was 125.331 + 121.6 + 141.003 + 95.25 = $483 Mil.
Non Operating Income was -0.002 + -0.026 + -0.012 + -0.001 = $-0 Mil.
Cash Flow from Operations was 178.518 + 148.072 + 122.575 + 136.402 = $586 Mil.
|Accounts Receivable was $292 Mil.
Revenue was 540.849 + 590.422 + 630.934 + 484.223 = $2,246 Mil.
Gross Profit was 277.161 + 307.47 + 336.262 + 252.039 = $1,173 Mil.
Total Current Assets was $1,183 Mil.
Total Assets was $1,421 Mil.
Property, Plant and Equipment(Net PPE) was $88 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $600 Mil.
Total Current Liabilities was $316 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)|
|=||(280.203 / 2464.866)||/||(291.638 / 2246.428)|
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)|
|=||(341.92 / 2246.428)||/||(331.783 / 2464.866)|
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 - (1693.429 + 90.156) / 1938.875)||/||(1 - (1183.043 + 88.143) / 1420.509)|
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))|
|=||(22.762 / (22.762 + 88.143))||/||(25.651 / (25.651 + 90.156))|
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)|
|=||(592.305 / 2464.866)||/||(600.014 / 2246.428)|
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 + 355.716) / 1938.875)||/||((0 + 316.014) / 1420.509)|
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|
|=||(483.184 - -0.041||-||585.567)||/||1938.875|
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 -2.81 suggests that the company will not 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