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MeadWestvaco Corp (NYSE:MWV)
Beneish M-Score
-2.06 (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 -2.06 signals that the company is a manipulator.

MWV' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -1.25
Current: -2.06

-3.08
-1.25

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.


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 * 1.0669+0.528 * 0.7896+0.404 * 1.1848+0.892 * 1.0634+0.115 * 0.9489
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.874+4.679 * 0.0594-0.327 * 0.8491
=-2.06

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $784 Mil.
Revenue was 1468 + 1467 + 1322 + 1310 = $5,567 Mil.
Gross Profit was 333 + 318 + 247 + 244 = $1,142 Mil.
Total Current Assets was $2,028 Mil.
Total Assets was $9,704 Mil.
Property, Plant and Equipment(Net PPE) was $3,490 Mil.
Depreciation, Depletion and Amortization(DDA) was $380 Mil.
Selling, General & Admin. Expense(SGA) was $619 Mil.
Total Current Liabilities was $1,064 Mil.
Long-Term Debt was $1,799 Mil.
Net Income was 106 + 73 + 31 + 677 = $887 Mil.
Non Operating Income was -2 + -13 + 0 + 65 = $50 Mil.
Cash Flow from Operations was 141 + 151 + -208 + 177 = $261 Mil.
Accounts Receivable was $691 Mil.
Revenue was 1378 + 1390 + 1311 + 1156 = $5,235 Mil.
Gross Profit was 283 + 237 + 196 + 132 = $848 Mil.
Total Current Assets was $1,939 Mil.
Total Assets was $8,896 Mil.
Property, Plant and Equipment(Net PPE) was $3,718 Mil.
Depreciation, Depletion and Amortization(DDA) was $382 Mil.
Selling, General & Admin. Expense(SGA) was $666 Mil.
Total Current Liabilities was $1,053 Mil.
Long-Term Debt was $2,038 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)
=(784 / 5567) / (691 / 5235)
=0.14082989 / 0.13199618
=1.0669

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)
=(318 / 5235) / (333 / 5567)
=0.16198663 / 0.20513742
=0.7896

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 - (2028 + 3490) / 9704) / (1 - (1939 + 3718) / 8896)
=0.43136851 / 0.36409622
=1.1848

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
=5567 / 5235
=1.0634

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))
=(382 / (382 + 3718)) / (380 / (380 + 3490))
=0.09317073 / 0.09819121
=0.9489

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)
=(619 / 5567) / (666 / 5235)
=0.11119095 / 0.12722063
=0.874

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)
=((1799 + 1064) / 9704) / ((2038 + 1053) / 8896)
=0.29503298 / 0.34745953
=0.8491

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
=(887 - 50 - 261) / 9704
=0.0594

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 -2.06 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.8231.07171.03610.98290.79111.28921.07740.66461.02971.0135
GMI 0.93341.0671.01340.96921.11480.90280.91490.91751.08591.0936
AQI 1.77080.70551.10221.33320.83241.0770.99881.00111.03151.1095
SGI 1.08881.01821.05830.98121.03590.81450.91491.07520.99421.0193
DEPI 0.64540.95760.96150.90920.95381.08011.09981.03361.04220.957
SGAI 0.9420.92821.13110.97980.89771.14580.86721.04181.02240.9178
LVGI 0.96580.91781.06420.94221.08840.88890.98431.03050.9420.8083
TATA -0.1261-0.0241-0.0578-0.0649-0.0332-0.1125-0.0489-0.0362-0.02770.0333
M-score -2.90-2.56-2.66-2.69-2.82-2.91-2.72-2.95-2.51-2.13

MeadWestvaco Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.73030.77481.0520.94921.0711.0311.01351.06731.10211.0669
GMI 1.02121.02931.09311.14811.25931.26021.09360.96310.82610.7896
AQI 0.96730.94321.03151.01191.05741.09821.10951.21131.18291.1848
SGI 1.08691.10420.97310.98220.96740.96711.01931.02181.04281.0634
DEPI 0.99231.00911.04221.00791.01950.98760.9570.94360.97350.9489
SGAI 1.00721.04351.00261.03771.0141.01120.91780.89630.90590.874
LVGI 0.9930.99740.9420.67711.01170.9510.80830.83550.82380.8491
TATA -0.0375-0.0283-0.0277-0.0196-0.0337-0.03370.0320.04840.0550.0594
M-score -2.83-2.74-2.50-2.45-2.45-2.45-2.14-2.04-2.04-2.06
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