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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 -1.89. 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 * 0.9972||+||0.528 * 0.9751||+||0.404 * 0.9267||+||0.892 * 1.0656||+||0.115 * 1.0356|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1476||+||4.679 * -0.0147||-||0.327 * 1.0801|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $205 Mil.|
Revenue was 316.4 + 302.6 + 313.1 + 287.2 = $1,219 Mil.
Gross Profit was 105.9 + 106.2 + 108.1 + 96.5 = $417 Mil.
Total Current Assets was $603 Mil.
Total Assets was $1,604 Mil.
Property, Plant and Equipment(Net PPE) was $199 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $350 Mil.
Total Current Liabilities was $277 Mil.
Long-Term Debt was $558 Mil.
Net Income was 3.8 + 8.6 + 8.3 + 1.3 = $22 Mil.
Non Operating Income was 24 + -4 + -2.5 + -4.2 = $13 Mil.
Cash Flow from Operations was 42.1 + 3.9 + 11.2 + -25 = $32 Mil.
|Accounts Receivable was $193 Mil.
Revenue was 275.5 + 276 + 305.8 + 286.9 = $1,144 Mil.
Gross Profit was 85.8 + 92.1 + 109.2 + 94.2 = $381 Mil.
Total Current Assets was $457 Mil.
Total Assets was $1,398 Mil.
Property, Plant and Equipment(Net PPE) was $188 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $417 Mil.
Long-Term Debt was $257 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)|
|=||(205.2 / 1219.3)||/||(193.1 / 1144.2)|
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)|
|=||(106.2 / 1144.2)||/||(105.9 / 1219.3)|
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 - (603.1 + 199.3) / 1604)||/||(1 - (456.7 + 187.5) / 1398.3)|
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))|
|=||(56.6 / (56.6 + 187.5))||/||(57.5 / (57.5 + 199.3))|
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)|
|=||(349.5 / 1219.3)||/||(285.8 / 1144.2)|
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)|
|=||((557.9 + 277.2) / 1604)||/||((256.6 + 417.4) / 1398.3)|
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|
|=||(22 - 13.3||-||32.2)||/||1604|
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 -2.58 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