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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 -2.51.
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 * 1.0216||+||0.528 * 0.9793||+||0.404 * 0.9942||+||0.892 * 0.9924||+||0.115 * 0.9591|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9917||+||4.679 * -0.0235||-||0.327 * 1.1027|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $408 Mil.|
Revenue was 608.286 + 539.674 + 673.535 + 604.154 = $2,426 Mil.
Gross Profit was 347.576 + 299.907 + 390.747 + 339.529 = $1,378 Mil.
Total Current Assets was $900 Mil.
Total Assets was $2,062 Mil.
Property, Plant and Equipment(Net PPE) was $514 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $591 Mil.
Long-Term Debt was $693 Mil.
Net Income was 79.588 + 65.674 + 123.351 + 88.861 = $357 Mil.
Non Operating Income was -10.378 + -0.596 + 5.197 + -2.553 = $-8 Mil.
Cash Flow from Operations was 115.525 + 35.7 + 137.042 + 126.041 = $414 Mil.
|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.
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)|
|=||(407.972 / 2425.649)||/||(402.404 / 2444.286)|
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)|
|=||(1359.65 / 2444.286)||/||(1377.759 / 2425.649)|
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 - (900.26 + 514.312) / 2061.747)||/||(1 - (912.664 + 522.195) / 2096.949)|
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))|
|=||(63.371 / (63.371 + 522.195))||/||(65.413 / (65.413 + 514.312))|
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)|
|=||(709.683 / 2425.649)||/||(721.134 / 2444.286)|
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)|
|=||((693.263 + 591.108) / 2061.747)||/||((605.141 + 579.54) / 2096.949)|
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|
|=||(357.474 - -8.33||-||414.308)||/||2061.747|
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 -2.63 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