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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 Corporation has a M-score of -2.13 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of MeadWestvaco Corporation was -1.43. The lowest was -2.95. And the median was -2.66.
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 Corporation 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 * 1.0135||+||0.528 * 1.0936||+||0.404 * 1.1095||+||0.892 * 1.0193||+||0.115 * 0.957|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9178||+||4.679 * 0.0333||-||0.327 * 0.8083|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $625 Mil.|
Revenue was 1177 + 1434 + 1434 + 1344 = $5,389 Mil.
Gross Profit was 160 + 322 + 263 + 215 = $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.
Net Income was 677 + 80 + 71 + 11 = $839 Mil.
Non Operating Income was 44 + 8 + 5 + 2 = $59 Mil.
Cash Flow from Operations was 177 + 148 + 199 + -87 = $437 Mil.
|Accounts Receivable was $605 Mil.
Revenue was 1156 + 1395 + 1423 + 1313 = $5,287 Mil.
Gross Profit was 132 + 300 + 325 + 273 = $1,030 Mil.
Total Current Assets was $2,066 Mil.
Total Assets was $8,908 Mil.
Property, Plant and Equipment(Net PPE) was $3,593 Mil.
Depreciation, Depletion and Amortization(DDA) was $366 Mil.
Selling, General & Admin. Expense(SGA) was $682 Mil.
Total Current Liabilities was $1,106 Mil.
Long-Term Debt was $2,100 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)|
|=||(625 / 5389)||/||(605 / 5287)|
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)|
|=||(322 / 5287)||/||(160 / 5389)|
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 - (2476 + 3647) / 10285)||/||(1 - (2066 + 3593) / 8908)|
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))|
|=||(366 / (366 + 3593))||/||(390 / (390 + 3647))|
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)|
|=||(638 / 5389)||/||(682 / 5287)|
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)|
|=||((1816 + 1176) / 10285)||/||((2100 + 1106) / 8908)|
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|
|=||(839 - 59||-||437)||/||10285|
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 Corporation has a M-score of -2.13 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 Corporation Annual Data
MeadWestvaco Corporation Quarterly Data