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MeadWestvaco Corp (NYSE:MWV)
Beneish M-Score
-2.61 (As of Today)

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.

MeadWestvaco Corp has a M-score of -2.61 suggests that the company is not a manipulator.

MWV' s 10-Year Beneish M-Score Range
Min: -3.01   Max: -1.43
Current: -2.61

-3.01
-1.43

During the past 13 years, the highest Beneish M-Score of MeadWestvaco Corp was -1.43. The lowest was -3.01. And the median was -2.64.


Definition

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 MeadWestvaco 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 * 0.931+0.528 * 0.8603+0.404 * 1.0472+0.892 * 1.0449+0.115 * 0.9901
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9105+4.679 * -0.0121-0.327 * 1.0348
=-2.61

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $608 Mil.
Revenue was 1374 + 1468 + 1467 + 1322 = $5,631 Mil.
Gross Profit was 268 + 333 + 318 + 247 = $1,166 Mil.
Total Current Assets was $1,974 Mil.
Total Assets was $9,364 Mil.
Property, Plant and Equipment(Net PPE) was $3,422 Mil.
Depreciation, Depletion and Amortization(DDA) was $370 Mil.
Selling, General & Admin. Expense(SGA) was $607 Mil.
Total Current Liabilities was $1,029 Mil.
Long-Term Debt was $1,790 Mil.
Net Income was 53 + 106 + 73 + 31 = $263 Mil.
Non Operating Income was 9 + -2 + -13 + 0 = $-6 Mil.
Cash Flow from Operations was 298 + 141 + 151 + -208 = $382 Mil.
Accounts Receivable was $625 Mil.
Revenue was 1310 + 1378 + 1390 + 1311 = $5,389 Mil.
Gross Profit was 244 + 283 + 237 + 196 = $960 Mil.
Total Current Assets was $2,476 Mil.
Total Assets was $10,285 Mil.
Property, Plant and Equipment(Net PPE) was $3,647 Mil.
Depreciation, Depletion and Amortization(DDA) was $390 Mil.
Selling, General & Admin. Expense(SGA) was $638 Mil.
Total Current Liabilities was $1,176 Mil.
Long-Term Debt was $1,816 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(608 / 5631) / (625 / 5389)
=0.10797372 / 0.11597699
=0.931

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(333 / 5389) / (268 / 5631)
=0.17814066 / 0.20706802
=0.8603

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1974 + 3422) / 9364) / (1 - (2476 + 3647) / 10285)
=0.42375053 / 0.40466699
=1.0472

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=5631 / 5389
=1.0449

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))
=(390 / (390 + 3647)) / (370 / (370 + 3422))
=0.09660639 / 0.09757384
=0.9901

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)
=(607 / 5631) / (638 / 5389)
=0.10779613 / 0.11838931
=0.9105

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)
=((1790 + 1029) / 9364) / ((1816 + 1176) / 10285)
=0.30104656 / 0.29090909
=1.0348

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(263 - -6 - 382) / 9364
=-0.0121

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.

MeadWestvaco Corp has a M-score of -2.61 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

MeadWestvaco Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.07171.03610.98290.79111.28920.9360.7651.02971.01350.931
GMI 1.0671.01340.96921.11480.90280.8281.01381.08591.09360.8603
AQI 0.70551.10221.33320.83241.0770.99881.00111.03151.10951.0472
SGI 1.01821.05830.98121.03590.81451.05310.93410.99421.01931.0449
DEPI 0.95760.96150.90920.95381.08011.0261.10791.04220.9570.9901
SGAI 0.92821.13110.97980.89771.14580.91690.98531.02240.91780.9105
LVGI 0.91781.06420.94221.08841.19470.73241.03050.9420.80831.0348
TATA -0.0241-0.0578-0.0649-0.0332-0.1125-0.0515-0.0362-0.02770.0347-0.0121
M-score -2.56-2.66-2.69-2.82-3.01-2.72-2.91-2.51-2.12-2.61

MeadWestvaco Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.89291.0520.94921.0711.0311.01351.06731.10211.06690.931
GMI 1.11951.09311.14811.25931.26021.09360.96310.82610.78960.8603
AQI 0.94321.03151.01191.05741.09821.10951.21131.18291.18481.0472
SGI 0.95820.97310.98220.96740.96711.01931.02181.04281.06341.0449
DEPI 1.08561.04221.00791.01950.98760.9570.94360.97350.94890.9901
SGAI 0.98571.00261.03771.0141.01120.91780.89630.90590.8740.9105
LVGI 0.99740.9420.67711.01170.9510.80830.83550.82380.84911.0348
TATA -0.0283-0.0277-0.0196-0.0337-0.03370.03330.04980.05640.0608-0.0121
M-score -2.69-2.50-2.45-2.45-2.45-2.13-2.03-2.03-2.05-2.61
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