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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 -2.66.
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 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 * 0.9666||+||0.528 * 1.017||+||0.404 * 1.1198||+||0.892 * 1.0472||+||0.115 * 1.1637|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9769||+||4.679 * 0.0049||-||0.327 * 1.082|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 56.913 + 66.764 + 57.523 + 54.001 = $235 Mil.
Non Operating Income was 0.385 + -2.203 + -2.216 + 1.754 = $-2 Mil.
Cash Flow from Operations was 77.162 + 80.135 + 4.381 + 69.535 = $231 Mil.
|Accounts Receivable was $324 Mil.
Revenue was 580.455 + 583.779 + 559.75 + 513.322 = $2,237 Mil.
Gross Profit was 163.823 + 169.428 + 168.407 + 138.861 = $641 Mil.
Total Current Assets was $926 Mil.
Total Assets was $1,345 Mil.
Property, Plant and Equipment(Net PPE) was $282 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $161 Mil.
Total Current Liabilities was $263 Mil.
Long-Term Debt was $349 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)|
|=||(327.641 / 2342.898)||/||(323.669 / 2237.306)|
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)|
|=||(180.746 / 2237.306)||/||(165.219 / 2342.898)|
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 - (844.142 + 297.447) / 1288.318)||/||(1 - (926.077 + 282.339) / 1345.238)|
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))|
|=||(46.866 / (46.866 + 282.339))||/||(41.462 / (41.462 + 297.447))|
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)|
|=||(164.967 / 2342.898)||/||(161.254 / 2237.306)|
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)|
|=||((384.512 + 250.581) / 1288.318)||/||((349.452 + 263.416) / 1345.238)|
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|
|=||(235.201 - -2.28||-||231.213)||/||1288.318|
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 -2.39 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