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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 -2.08. The lowest was -2.87. And the median was -2.51.
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 * 0.9379||+||0.528 * 0.9705||+||0.404 * 0.9206||+||0.892 * 1.0037||+||0.115 * 0.9837|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0141||+||4.679 * -0.0389||-||0.327 * 1.2284|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $402 Mil.|
Revenue was 582.057 + 535.701 + 697.428 + 629.1 = $2,444 Mil.
Gross Profit was 322.912 + 298.805 + 394.382 + 343.551 = $1,360 Mil.
Total Current Assets was $913 Mil.
Total Assets was $2,097 Mil.
Property, Plant and Equipment(Net PPE) was $522 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $721 Mil.
Total Current Liabilities was $580 Mil.
Long-Term Debt was $605 Mil.
Net Income was 77.557 + 63.051 + 121.172 + 84.996 = $347 Mil.
Non Operating Income was -1.687 + -0.09 + -0.882 + -0.625 = $-3 Mil.
Cash Flow from Operations was 105.189 + 58.596 + 140.674 + 127.261 = $432 Mil.
|Accounts Receivable was $427 Mil.
Revenue was 608.834 + 550.621 + 684.252 + 591.687 = $2,435 Mil.
Gross Profit was 328.176 + 292.641 + 375.357 + 318.573 = $1,315 Mil.
Total Current Assets was $886 Mil.
Total Assets was $2,143 Mil.
Property, Plant and Equipment(Net PPE) was $522 Mil.
Depreciation, Depletion and Amortization(DDA) was $62 Mil.
Selling, General & Admin. Expense(SGA) was $709 Mil.
Total Current Liabilities was $640 Mil.
Long-Term Debt was $345 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)|
|=||(402.404 / 2444.286)||/||(427.495 / 2435.394)|
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)|
|=||(298.805 / 2435.394)||/||(322.912 / 2444.286)|
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 - (912.664 + 522.195) / 2096.949)||/||(1 - (886.388 + 521.884) / 2143.42)|
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))|
|=||(62.179 / (62.179 + 521.884))||/||(63.371 / (63.371 + 522.195))|
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)|
|=||(721.134 / 2444.286)||/||(708.528 / 2435.394)|
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)|
|=||((605.141 + 579.54) / 2096.949)||/||((345.364 + 640.381) / 2143.42)|
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|
|=||(346.776 - -3.284||-||431.72)||/||2096.949|
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 -2.84 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