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Beneish M-Score -0.86 higher than -2.22, which implies that it might have manipulated its financial results.
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 -2.10.
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 * 1.1049||+||0.528 * 0.9204||+||0.404 * 3.7253||+||0.892 * 1.1177||+||0.115 * 0.9712|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4309||+||4.679 * 0.0548||-||0.327 * 0.4526|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $408 Mil.|
Revenue was 756.619 + 693.722 + 626.791 + 605.566 = $2,683 Mil.
Gross Profit was 465.476 + 394.508 + 368.957 + 331.783 = $1,561 Mil.
Total Current Assets was $3,751 Mil.
Total Assets was $5,604 Mil.
Property, Plant and Equipment(Net PPE) was $95 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $725 Mil.
Total Current Liabilities was $505 Mil.
Long-Term Debt was $0 Mil.
Net Income was 174.574 + 229.004 + 4.414 + 125.331 = $533 Mil.
Non Operating Income was 0 + 0 + 0 + -0.041 = $-0 Mil.
Cash Flow from Operations was 187.355 + -57.78 + -81.755 + 178.518 = $226 Mil.
|Accounts Receivable was $330 Mil.
Revenue was 635.972 + 687.199 + 536.129 + 540.849 = $2,400 Mil.
Gross Profit was 341.92 + 379.288 + 286.818 + 277.161 = $1,285 Mil.
Total Current Assets was $1,617 Mil.
Total Assets was $1,863 Mil.
Property, Plant and Equipment(Net PPE) was $88 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $453 Mil.
Total Current Liabilities was $371 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)|
|=||(407.771 / 2682.698)||/||(330.176 / 2400.149)|
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)|
|=||(394.508 / 2400.149)||/||(465.476 / 2682.698)|
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 - (3750.647 + 94.727) / 5603.738)||/||(1 - (1617.479 + 88.487) / 1862.878)|
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))|
|=||(25.442 / (25.442 + 88.487))||/||(28.284 / (28.284 + 94.727))|
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)|
|=||(725.205 / 2682.698)||/||(453.443 / 2400.149)|
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 + 504.606) / 5603.738)||/||((0 + 370.611) / 1862.878)|
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|
|=||(533.323 - -0.041||-||226.338)||/||5603.738|
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 -0.86 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