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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 -2.82. And the median was -2.50.
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 * 0.9705||+||0.528 * 0.9914||+||0.404 * 0.9212||+||0.892 * 1.0514||+||0.115 * 0.9625|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9973||+||4.679 * -0.0263||-||0.327 * 1.1187|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $411 Mil.|
Revenue was 629.1 + 608.834 + 550.621 + 684.252 = $2,473 Mil.
Gross Profit was 343.551 + 328.176 + 292.641 + 375.452 = $1,340 Mil.
Total Current Assets was $873 Mil.
Total Assets was $2,107 Mil.
Property, Plant and Equipment(Net PPE) was $512 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $722 Mil.
Total Current Liabilities was $651 Mil.
Long-Term Debt was $365 Mil.
Net Income was 84.996 + 74.022 + 58.051 + 110.162 = $327 Mil.
Non Operating Income was -0.625 + -2.311 + -0.317 + -0.822 = $-4 Mil.
Cash Flow from Operations was 127.261 + 108.132 + 42.845 + 108.513 = $387 Mil.
|Accounts Receivable was $403 Mil.
Revenue was 591.687 + 578.68 + 524.355 + 657.292 = $2,352 Mil.
Gross Profit was 318.573 + 308.843 + 279.158 + 356.788 = $1,263 Mil.
Total Current Assets was $849 Mil.
Total Assets was $2,144 Mil.
Property, Plant and Equipment(Net PPE) was $497 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $688 Mil.
Total Current Liabilities was $539 Mil.
Long-Term Debt was $385 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)|
|=||(410.9 / 2472.807)||/||(402.708 / 2352.014)|
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)|
|=||(328.176 / 2352.014)||/||(343.551 / 2472.807)|
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 - (872.912 + 512.091) / 2107.455)||/||(1 - (848.875 + 497.277) / 2144.016)|
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))|
|=||(58.357 / (58.357 + 497.277))||/||(62.72 / (62.72 + 512.091))|
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)|
|=||(721.676 / 2472.807)||/||(688.284 / 2352.014)|
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)|
|=||((365.007 + 650.884) / 2107.455)||/||((384.871 + 538.975) / 2144.016)|
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|
|=||(327.231 - -4.075||-||386.751)||/||2107.455|
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 -2.66 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