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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 Mettler-Toledo International Inc was 1.48. The lowest was -8.07. And the median was -2.53.
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 Mettler-Toledo International Inc 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 * 1.039||+||0.528 * 0.984||+||0.404 * 1.0289||+||0.892 * 1.0218||+||0.115 * 0.9809|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9947||+||4.679 * -0.0222||-||0.327 * 1.1194|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $415 Mil.|
Revenue was 650.598 + 608.286 + 539.674 + 673.535 = $2,472 Mil.
Gross Profit was 369.494 + 347.576 + 299.907 + 390.747 = $1,408 Mil.
Total Current Assets was $946 Mil.
Total Assets was $2,221 Mil.
Property, Plant and Equipment(Net PPE) was $527 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $722 Mil.
Total Current Liabilities was $621 Mil.
Long-Term Debt was $826 Mil.
Net Income was 101.332 + 79.588 + 65.674 + 123.351 = $370 Mil.
Non Operating Income was -2.097 + -10.378 + -0.596 + 5.197 = $-8 Mil.
Cash Flow from Operations was 138.922 + 115.525 + 35.7 + 137.042 = $427 Mil.
|Accounts Receivable was $391 Mil.
Revenue was 604.154 + 582.057 + 535.701 + 697.428 = $2,419 Mil.
Gross Profit was 339.529 + 322.912 + 298.805 + 394.382 = $1,356 Mil.
Total Current Assets was $868 Mil.
Total Assets was $2,054 Mil.
Property, Plant and Equipment(Net PPE) was $514 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $593 Mil.
Long-Term Debt was $602 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)|
|=||(414.607 / 2472.093)||/||(390.54 / 2419.34)|
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)|
|=||(1355.628 / 2419.34)||/||(1407.724 / 2472.093)|
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 - (946.102 + 527.477) / 2220.98)||/||(1 - (868.315 + 513.568) / 2053.546)|
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))|
|=||(63.665 / (63.665 + 513.568))||/||(66.824 / (66.824 + 527.477))|
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)|
|=||(721.817 / 2472.093)||/||(710.181 / 2419.34)|
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)|
|=||((826.022 + 620.849) / 2220.98)||/||((601.731 + 593.415) / 2053.546)|
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|
|=||(369.945 - -7.874||-||427.189)||/||2220.98|
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.
Mettler-Toledo International Inc has a M-score of -2.57 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
Mettler-Toledo International Inc Annual Data
Mettler-Toledo International Inc Quarterly Data