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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.
MeadWestvaco Corp has a M-score of -2.02 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of MeadWestvaco Corp was -1.25. The lowest was -3.08. And the median was -2.62.
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 * 1.1178||+||0.528 * 0.8495||+||0.404 * 1.1829||+||0.892 * 1.0282||+||0.115 * 0.9735|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9173||+||4.679 * 0.0564||-||0.327 * 0.8238|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $793 Mil.|
Revenue was 1467 + 1322 + 1177 + 1434 = $5,400 Mil.
Gross Profit was 318 + 247 + 160 + 322 = $1,047 Mil.
Total Current Assets was $1,972 Mil.
Total Assets was $9,818 Mil.
Property, Plant and Equipment(Net PPE) was $3,639 Mil.
Depreciation, Depletion and Amortization(DDA) was $383 Mil.
Selling, General & Admin. Expense(SGA) was $631 Mil.
Total Current Liabilities was $1,118 Mil.
Long-Term Debt was $1,787 Mil.
Net Income was 73 + 31 + 677 + 80 = $861 Mil.
Non Operating Income was -13 + 0 + 44 + 8 = $39 Mil.
Cash Flow from Operations was 151 + -208 + 177 + 148 = $268 Mil.
|Accounts Receivable was $690 Mil.
Revenue was 1390 + 1311 + 1156 + 1395 = $5,252 Mil.
Gross Profit was 237 + 196 + 132 + 300 = $865 Mil.
Total Current Assets was $1,933 Mil.
Total Assets was $8,801 Mil.
Property, Plant and Equipment(Net PPE) was $3,680 Mil.
Depreciation, Depletion and Amortization(DDA) was $376 Mil.
Selling, General & Admin. Expense(SGA) was $669 Mil.
Total Current Liabilities was $1,112 Mil.
Long-Term Debt was $2,049 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)|
|=||(793 / 5400)||/||(690 / 5252)|
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)|
|=||(247 / 5252)||/||(318 / 5400)|
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 - (1972 + 3639) / 9818)||/||(1 - (1933 + 3680) / 8801)|
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))|
|=||(376 / (376 + 3680))||/||(383 / (383 + 3639))|
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)|
|=||(631 / 5400)||/||(669 / 5252)|
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)|
|=||((1787 + 1118) / 9818)||/||((2049 + 1112) / 8801)|
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|
|=||(861 - 39||-||268)||/||9818|
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 -2.02 signals that the company is likely to 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
MeadWestvaco Corp Annual Data
MeadWestvaco Corp Quarterly Data