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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 -2.15. The lowest was -3.59. And the median was -2.61.
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 * 0.9931||+||0.528 * 0.9881||+||0.404 * 1.0155||+||0.892 * 0.9861||+||0.115 * 1.0285|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0174||+||4.679 * -0.0619||-||0.327 * 1.0817|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $208 Mil.|
Revenue was 286.9 + 292.7 + 313.2 + 294.9 = $1,188 Mil.
Gross Profit was 90.6 + 98.6 + 107.9 + 97.6 = $395 Mil.
Total Current Assets was $525 Mil.
Total Assets was $1,546 Mil.
Property, Plant and Equipment(Net PPE) was $215 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $304 Mil.
Total Current Liabilities was $303 Mil.
Long-Term Debt was $708 Mil.
Net Income was -2.9 + 6 + 3.6 + -46.8 = $-40 Mil.
Non Operating Income was -3.5 + -1.3 + -2.5 + -1.6 = $-9 Mil.
Cash Flow from Operations was 56.6 + 10.9 + 25.4 + -28.4 = $65 Mil.
|Accounts Receivable was $213 Mil.
Revenue was 321.9 + 306.6 + 298.4 + 277.5 = $1,204 Mil.
Gross Profit was 103 + 101.4 + 101.3 + 89.8 = $396 Mil.
Total Current Assets was $518 Mil.
Total Assets was $1,499 Mil.
Property, Plant and Equipment(Net PPE) was $212 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $279 Mil.
Long-Term Debt was $627 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)|
|=||(208.1 / 1187.7)||/||(212.5 / 1204.4)|
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)|
|=||(395.5 / 1204.4)||/||(394.7 / 1187.7)|
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 - (524.9 + 215.4) / 1546.4)||/||(1 - (517.9 + 211.5) / 1498.8)|
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))|
|=||(58.1 / (58.1 + 211.5))||/||(57.1 / (57.1 + 215.4))|
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)|
|=||(303.8 / 1187.7)||/||(302.8 / 1204.4)|
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)|
|=||((708 + 303) / 1546.4)||/||((627.2 + 278.7) / 1498.8)|
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|
|=||(-40.1 - -8.9||-||64.5)||/||1546.4|
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 -2.81 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