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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 -2.62 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 -2.10.
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 * 0.99||+||0.528 * 0.9801||+||0.404 * 0.7759||+||0.892 * 1.0995||+||0.115 * 1.0403|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9902||+||4.679 * -0.0391||-||0.327 * 0.8305|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $346 Mil.|
Revenue was 536.129 + 540.849 + 590.422 + 630.934 = $2,298 Mil.
Gross Profit was 286.818 + 277.161 + 307.47 + 336.262 = $1,208 Mil.
Total Current Assets was $1,355 Mil.
Total Assets was $1,594 Mil.
Property, Plant and Equipment(Net PPE) was $92 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $593 Mil.
Total Current Liabilities was $380 Mil.
Long-Term Debt was $0 Mil.
Net Income was 95.25 + 76.106 + 92.187 + 106.873 = $370 Mil.
Non Operating Income was -0.001 + 0.034 + 0.044 + 0.066 = $0 Mil.
Cash Flow from Operations was 136.402 + 66.199 + 176.114 + 53.827 = $433 Mil.
|Accounts Receivable was $318 Mil.
Revenue was 484.223 + 471.517 + 541.94 + 592.64 = $2,090 Mil.
Gross Profit was 252.039 + 243.888 + 273.592 + 307.008 = $1,077 Mil.
Total Current Assets was $937 Mil.
Total Assets was $1,147 Mil.
Property, Plant and Equipment(Net PPE) was $75 Mil.
Depreciation, Depletion and Amortization(DDA) was $21 Mil.
Selling, General & Admin. Expense(SGA) was $545 Mil.
Total Current Liabilities was $330 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)|
|=||(345.786 / 2298.334)||/||(317.655 / 2090.32)|
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)|
|=||(277.161 / 2090.32)||/||(286.818 / 2298.334)|
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 - (1355.213 + 91.733) / 1593.583)||/||(1 - (936.699 + 74.596) / 1147.372)|
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))|
|=||(20.654 / (20.654 + 74.596))||/||(24.155 / (24.155 + 91.733))|
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)|
|=||(593.236 / 2298.334)||/||(544.883 / 2090.32)|
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 + 380.366) / 1593.583)||/||((0 + 329.766) / 1147.372)|
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|
|=||(370.416 - 0.143||-||432.542)||/||1593.583|
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 -2.62 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