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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 -2.25. The lowest was -2.25. And the median was -2.25.
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 * 1.3162||+||0.528 * 1.0824||+||0.404 * 0.9686||+||0.892 * 1.0604||+||0.115 * 1.0524|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1287||+||4.679 * -0.0282||-||0.327 * 0.9915|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,405 Mil.|
Revenue was 1881.12 + 1892.532 + 1677.614 + 2290.59 = $7,742 Mil.
Gross Profit was 1538.791 + 1057.208 + 950.692 + 1173.615 = $4,720 Mil.
Total Current Assets was $2,692 Mil.
Total Assets was $29,778 Mil.
Property, Plant and Equipment(Net PPE) was $18,647 Mil.
Depreciation, Depletion and Amortization(DDA) was $615 Mil.
Selling, General & Admin. Expense(SGA) was $354 Mil.
Total Current Liabilities was $3,134 Mil.
Long-Term Debt was $8,606 Mil.
Net Income was 221.609 + 234.614 + 127.367 + 235.957 = $820 Mil.
Non Operating Income was 5.565 + 11.86 + 5.526 + 1.667 = $25 Mil.
Cash Flow from Operations was 231.456 + 507.354 + 402.867 + 493.796 = $1,635 Mil.
|Accounts Receivable was $1,007 Mil.
Revenue was 1777.729 + 1892.59 + 1635.862 + 1995.023 = $7,301 Mil.
Gross Profit was 1482.777 + 1140.612 + 1053.418 + 1141.443 = $4,818 Mil.
Total Current Assets was $2,087 Mil.
Total Assets was $27,796 Mil.
Property, Plant and Equipment(Net PPE) was $17,576 Mil.
Depreciation, Depletion and Amortization(DDA) was $611 Mil.
Selling, General & Admin. Expense(SGA) was $296 Mil.
Total Current Liabilities was $3,276 Mil.
Long-Term Debt was $7,777 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)|
|=||(1405.411 / 7741.856)||/||(1007.002 / 7301.204)|
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)|
|=||(1057.208 / 7301.204)||/||(1538.791 / 7741.856)|
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 - (2692.465 + 18647.041) / 29777.975)||/||(1 - (2087.049 + 17576.186) / 27795.537)|
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))|
|=||(610.777 / (610.777 + 17576.186))||/||(614.657 / (614.657 + 18647.041))|
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)|
|=||(354.434 / 7741.856)||/||(296.149 / 7301.204)|
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)|
|=||((8606.017 + 3134.381) / 29777.975)||/||((7776.833 + 3275.651) / 27795.537)|
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|
|=||(819.547 - 24.618||-||1635.473)||/||29777.975|
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 -2.25 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