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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 Eversource Energy was -1.81. The lowest was -2.88. And the median was -2.56.
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 Eversource Energy 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 * 0.8894||+||0.528 * 0.9098||+||0.404 * 0.9725||+||0.892 * 0.9603||+||0.115 * 0.9989|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1108||+||4.679 * -0.0399||-||0.327 * 1.0085|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,096.26 Mil.|
Revenue was 1776.604 + 2039.706 + 1767.184 + 2055.635 = $7,639.13 Mil.
Gross Profit was 1277.705 + 1373.896 + 1185.924 + 1300.776 = $5,138.30 Mil.
Total Current Assets was $2,477.67 Mil.
Total Assets was $32,053.17 Mil.
Property, Plant and Equipment(Net PPE) was $21,350.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $715.47 Mil.
Selling, General & Admin. Expense(SGA) was $405.96 Mil.
Total Current Liabilities was $3,638.61 Mil.
Long-Term Debt was $8,829.35 Mil.
Net Income was 229.179 + 265.319 + 203.649 + 244.153 = $942.30 Mil.
Non Operating Income was 22.231 + 13.641 + 8.038 + 2.011 = $45.92 Mil.
Cash Flow from Operations was 524.684 + 671.93 + 478.474 + 499.964 = $2,175.05 Mil.
|Accounts Receivable was $1,283.49 Mil.
Revenue was 1691.23 + 1933.105 + 1817.061 + 2513.431 = $7,954.83 Mil.
Gross Profit was 1154.132 + 1230.465 + 1131.943 + 1351.382 = $4,867.92 Mil.
Total Current Assets was $2,618.79 Mil.
Total Assets was $30,580.31 Mil.
Property, Plant and Equipment(Net PPE) was $19,892.44 Mil.
Depreciation, Depletion and Amortization(DDA) was $665.86 Mil.
Selling, General & Admin. Expense(SGA) was $380.56 Mil.
Total Current Liabilities was $2,989.79 Mil.
Long-Term Debt was $8,805.57 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)|
|=||(1096.262 / 7639.129)||/||(1283.486 / 7954.827)|
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)|
|=||(4867.922 / 7954.827)||/||(5138.301 / 7639.129)|
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 - (2477.672 + 21350.51) / 32053.173)||/||(1 - (2618.786 + 19892.441) / 30580.309)|
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))|
|=||(665.856 / (665.856 + 19892.441))||/||(715.466 / (715.466 + 21350.51))|
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)|
|=||(405.963 / 7639.129)||/||(380.56 / 7954.827)|
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)|
|=||((8829.354 + 3638.605) / 32053.173)||/||((8805.574 + 2989.79) / 30580.309)|
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|
|=||(942.3 - 45.921||-||2175.052)||/||32053.173|
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.
Eversource Energy has a M-score of -2.88 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
Eversource Energy Annual Data
Eversource Energy Quarterly Data