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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 EnPro Industries Inc was -2.12. The lowest was -3.59. And the median was -2.60.
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 EnPro Industries Inc 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 * 1.0068||+||0.528 * 1.0128||+||0.404 * 1.0501||+||0.892 * 1.0174||+||0.115 * 1.1152|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0789||+||4.679 * -0.0764||-||0.327 * 1.1233|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $224 Mil.|
Revenue was 306.6 + 298.4 + 277.5 + 316.4 = $1,199 Mil.
Gross Profit was 101.4 + 101.3 + 89.8 + 105.9 = $398 Mil.
Total Current Assets was $546 Mil.
Total Assets was $1,540 Mil.
Property, Plant and Equipment(Net PPE) was $211 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $336 Mil.
Total Current Liabilities was $265 Mil.
Long-Term Debt was $648 Mil.
Net Income was 11.4 + -37.3 + -1.6 + 3.8 = $-24 Mil.
Non Operating Income was 0.1 + -0.2 + -4.1 + 24 = $20 Mil.
Cash Flow from Operations was 34.4 + 19.1 + -21.5 + 42.1 = $74 Mil.
|Accounts Receivable was $218 Mil.
Revenue was 302.6 + 313.1 + 287.2 + 275.5 = $1,178 Mil.
Gross Profit was 106.2 + 108.1 + 96.5 + 85.8 = $397 Mil.
Total Current Assets was $636 Mil.
Total Assets was $1,583 Mil.
Property, Plant and Equipment(Net PPE) was $180 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $306 Mil.
Total Current Liabilities was $277 Mil.
Long-Term Debt was $558 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)|
|=||(223.6 / 1198.9)||/||(218.3 / 1178.4)|
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)|
|=||(101.3 / 1178.4)||/||(101.4 / 1198.9)|
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 - (545.9 + 210.9) / 1539.8)||/||(1 - (636 + 180.3) / 1582.7)|
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))|
|=||(56.9 / (56.9 + 180.3))||/||(57.8 / (57.8 + 210.9))|
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)|
|=||(335.9 / 1198.9)||/||(306 / 1178.4)|
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)|
|=||((647.7 + 264.6) / 1539.8)||/||((557.8 + 277) / 1582.7)|
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|
|=||(-23.7 - 19.8||-||74.1)||/||1539.8|
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.
EnPro Industries Inc has a M-score of -2.83 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
EnPro Industries Inc Annual Data
EnPro Industries Inc Quarterly Data