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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 -2.14. 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 * 1.016||+||0.528 * 1.0269||+||0.404 * 0.953||+||0.892 * 1.0101||+||0.115 * 1.045|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9688||+||4.679 * -0.0927||-||0.327 * 1.08|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $215 Mil.|
Revenue was 294.9 + 321.9 + 306.6 + 298.4 = $1,222 Mil.
Gross Profit was 97.6 + 103 + 101.4 + 101.3 = $403 Mil.
Total Current Assets was $531 Mil.
Total Assets was $1,554 Mil.
Property, Plant and Equipment(Net PPE) was $213 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $311 Mil.
Total Current Liabilities was $522 Mil.
Long-Term Debt was $414 Mil.
Net Income was -46.8 + 6.6 + 11.4 + -37.3 = $-66 Mil.
Non Operating Income was -1.6 + 0.1 + 0.1 + -0.2 = $-2 Mil.
Cash Flow from Operations was -28.4 + 54.5 + 34.4 + 19.1 = $80 Mil.
|Accounts Receivable was $210 Mil.
Revenue was 277.5 + 316.4 + 302.6 + 313.1 = $1,210 Mil.
Gross Profit was 89.8 + 105.9 + 106.2 + 108.1 = $410 Mil.
Total Current Assets was $489 Mil.
Total Assets was $1,519 Mil.
Property, Plant and Equipment(Net PPE) was $199 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $318 Mil.
Total Current Liabilities was $237 Mil.
Long-Term Debt was $611 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)|
|=||(215.3 / 1221.8)||/||(209.8 / 1209.6)|
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)|
|=||(103 / 1209.6)||/||(97.6 / 1221.8)|
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 - (531 + 212.7) / 1554)||/||(1 - (488.8 + 199.3) / 1519.4)|
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))|
|=||(57.4 / (57.4 + 199.3))||/||(57.9 / (57.9 + 212.7))|
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)|
|=||(311.1 / 1221.8)||/||(317.9 / 1209.6)|
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)|
|=||((414.1 + 522.3) / 1554)||/||((611.1 + 236.6) / 1519.4)|
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|
|=||(-66.1 - -1.6||-||79.6)||/||1554|
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 -2.91 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