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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.
NewMarket Corp has a M-score of -2.30 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of NewMarket Corp was -1.97. The lowest was -3.98. And the median was -2.69.
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 * 1.0064||+||0.528 * 1.0258||+||0.404 * 1.0113||+||0.892 * 1.0542||+||0.115 * 1.2239|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9909||+||4.679 * 0.0164||-||0.327 * 0.9866|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $348 Mil.|
Revenue was 620.438 + 576.422 + 556.371 + 580.455 = $2,334 Mil.
Gross Profit was 180.746 + 161.93 + 151.638 + 163.823 = $658 Mil.
Total Current Assets was $833 Mil.
Total Assets was $1,272 Mil.
Property, Plant and Equipment(Net PPE) was $290 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $164 Mil.
Total Current Liabilities was $246 Mil.
Long-Term Debt was $353 Mil.
Net Income was 66.764 + 57.523 + 54.001 + 78.896 = $257 Mil.
Non Operating Income was -2.203 + -2.216 + 1.754 + -0.613 = $-3 Mil.
Cash Flow from Operations was 80.135 + 4.381 + 69.535 + 85.493 = $240 Mil.
|Accounts Receivable was $328 Mil.
Revenue was 583.779 + 559.75 + 516.18 + 554.044 = $2,214 Mil.
Gross Profit was 169.428 + 168.407 + 140.536 + 162.059 = $640 Mil.
Total Current Assets was $857 Mil.
Total Assets was $1,277 Mil.
Property, Plant and Equipment(Net PPE) was $273 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $245 Mil.
Long-Term Debt was $364 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)|
|=||(347.63 / 2333.686)||/||(327.67 / 2213.753)|
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)|
|=||(161.93 / 2213.753)||/||(180.746 / 2333.686)|
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 - (833.032 + 290.447) / 1272.35)||/||(1 - (856.618 + 272.531) / 1276.879)|
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))|
|=||(48.596 / (48.596 + 272.531))||/||(40.979 / (40.979 + 290.447))|
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)|
|=||(164.477 / 2333.686)||/||(157.464 / 2213.753)|
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)|
|=||((353.497 + 246.058) / 1272.35)||/||((364.437 + 245.422) / 1276.879)|
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|
|=||(257.184 - -3.278||-||239.544)||/||1272.35|
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 -2.30 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