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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 NewMarket Corp was -1.93. The lowest was -3.74. And the median was -2.68.
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 NewMarket 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 * 1.0065||+||0.528 * 0.9105||+||0.404 * 0.78||+||0.892 * 0.9433||+||0.115 * 1.2098|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0439||+||4.679 * -0.0128||-||0.327 * 1.2044|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $311 Mil.|
Revenue was 540.933 + 560.709 + 559.566 + 548.878 = $2,210 Mil.
Gross Profit was 174.771 + 169.708 + 181.272 + 157.528 = $683 Mil.
Total Current Assets was $804 Mil.
Total Assets was $1,289 Mil.
Property, Plant and Equipment(Net PPE) was $370 Mil.
Depreciation, Depletion and Amortization(DDA) was $42 Mil.
Selling, General & Admin. Expense(SGA) was $162 Mil.
Total Current Liabilities was $258 Mil.
Long-Term Debt was $508 Mil.
Net Income was 62.009 + 58.733 + 63.947 + 52.055 = $237 Mil.
Non Operating Income was 3.4 + 1.683 + -2.325 + -11.088 = $-8 Mil.
Cash Flow from Operations was 65.167 + 66.629 + 56.552 + 73.28 = $262 Mil.
|Accounts Receivable was $328 Mil.
Revenue was 589.667 + 620.438 + 576.422 + 556.371 = $2,343 Mil.
Gross Profit was 165.219 + 180.746 + 161.93 + 151.638 = $660 Mil.
Total Current Assets was $844 Mil.
Total Assets was $1,288 Mil.
Property, Plant and Equipment(Net PPE) was $297 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $165 Mil.
Total Current Liabilities was $251 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)|
|=||(311.087 / 2210.086)||/||(327.641 / 2342.898)|
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)|
|=||(169.708 / 2342.898)||/||(174.771 / 2210.086)|
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 - (804.041 + 370.431) / 1288.98)||/||(1 - (844.142 + 297.447) / 1288.318)|
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))|
|=||(41.462 / (41.462 + 297.447))||/||(41.672 / (41.672 + 370.431))|
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)|
|=||(162.445 / 2210.086)||/||(164.967 / 2342.898)|
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)|
|=||((507.571 + 257.757) / 1288.98)||/||((384.512 + 250.581) / 1288.318)|
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|
|=||(236.744 - -8.33||-||261.628)||/||1288.98|
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.
NewMarket Corp has a M-score of -2.77 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
NewMarket Corp Annual Data
NewMarket Corp Quarterly Data