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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.
Monster Beverage Corp has a M-score of -2.31 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Monster Beverage Corp was -0.06. The lowest was -3.04. And the median was -2.05.
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 * 1.1478||+||0.528 * 0.9904||+||0.404 * 0.7883||+||0.892 * 1.0901||+||0.115 * 1.1169|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0687||+||4.679 * -0.0043||-||0.327 * 0.8044|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $296 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.
Net Income was 76.106 + 92.187 + 106.873 + 63.496 = $339 Mil.
Non Operating Income was 0.034 + 0.044 + 0.066 + 2.571 = $3 Mil.
Cash Flow from Operations was 66.199 + 176.114 + 53.827 + 45.893 = $342 Mil.
|Accounts Receivable was $237 Mil.
Revenue was 471.517 + 541.94 + 592.64 + 454.605 = $2,061 Mil.
Gross Profit was 243.888 + 273.592 + 307.008 + 241.169 = $1,066 Mil.
Total Current Assets was $835 Mil.
Total Assets was $1,043 Mil.
Property, Plant and Equipment(Net PPE) was $69 Mil.
Depreciation, Depletion and Amortization(DDA) was $21 Mil.
Selling, General & Admin. Expense(SGA) was $515 Mil.
Total Current Liabilities was $289 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)|
|=||(296.18 / 2246.428)||/||(236.71 / 2060.702)|
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)|
|=||(307.47 / 2060.702)||/||(277.161 / 2246.428)|
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 - (1183.043 + 88.143) / 1420.509)||/||(1 - (835.068 + 69.137) / 1043.325)|
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))|
|=||(20.562 / (20.562 + 69.137))||/||(22.762 / (22.762 + 88.143))|
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)|
|=||(600.014 / 2246.428)||/||(515.034 / 2060.702)|
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 + 316.014) / 1420.509)||/||((0 + 288.545) / 1043.325)|
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|
|=||(338.662 - 2.715||-||342.033)||/||1420.509|
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 -2.31 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