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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 * 0.8828||+||0.528 * 0.9534||+||0.404 * 0.9074||+||0.892 * 1.0094||+||0.115 * 1.1722|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0046||+||4.679 * -0.032||-||0.327 * 1.0971|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $303 Mil.|
Revenue was 559.566 + 548.878 + 589.667 + 620.438 = $2,319 Mil.
Gross Profit was 181.272 + 157.528 + 165.219 + 180.746 = $685 Mil.
Total Current Assets was $811 Mil.
Total Assets was $1,258 Mil.
Property, Plant and Equipment(Net PPE) was $319 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $257 Mil.
Long-Term Debt was $374 Mil.
Net Income was 63.947 + 52.055 + 56.913 + 66.764 = $240 Mil.
Non Operating Income was -2.325 + -3.02 + 0.385 + -2.203 = $-7 Mil.
Cash Flow from Operations was 56.552 + 73.28 + 77.162 + 80.135 = $287 Mil.
|Accounts Receivable was $340 Mil.
Revenue was 576.422 + 556.371 + 580.455 + 583.779 = $2,297 Mil.
Gross Profit was 161.93 + 151.638 + 163.823 + 169.428 = $647 Mil.
Total Current Assets was $854 Mil.
Total Assets was $1,283 Mil.
Property, Plant and Equipment(Net PPE) was $286 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $231 Mil.
Long-Term Debt was $355 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)|
|=||(303.334 / 2318.549)||/||(340.407 / 2297.027)|
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)|
|=||(157.528 / 2297.027)||/||(181.272 / 2318.549)|
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 - (811.351 + 318.57) / 1257.67)||/||(1 - (853.795 + 285.788) / 1283.228)|
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))|
|=||(44.606 / (44.606 + 285.788))||/||(41.466 / (41.466 + 318.57))|
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)|
|=||(165.781 / 2318.549)||/||(163.485 / 2297.027)|
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)|
|=||((373.541 + 257.134) / 1257.67)||/||((355.482 + 231.033) / 1283.228)|
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|
|=||(239.679 - -7.163||-||287.129)||/||1257.67|
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 -2.80 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