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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.
Newell Rubbermaid Inc has a M-score of -2.56 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Newell Rubbermaid Inc was -1.79. The lowest was -3.42. And the median was -2.65.
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 Newell Rubbermaid 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 * 0.9738||+||0.528 * 1.0005||+||0.404 * 0.9809||+||0.892 * 1.0202||+||0.115 * 0.9941|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9822||+||4.679 * -0.0128||-||0.327 * 1.0216|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $1,105 Mil.|
Revenue was 1489.8 + 1487.2 + 1474.7 + 1240.8 = $5,693 Mil.
Gross Profit was 557 + 564.9 + 582.7 + 473.6 = $2,178 Mil.
Total Current Assets was $2,286 Mil.
Total Assets was $6,070 Mil.
Property, Plant and Equipment(Net PPE) was $540 Mil.
Depreciation, Depletion and Amortization(DDA) was $159 Mil.
Selling, General & Admin. Expense(SGA) was $1,446 Mil.
Total Current Liabilities was $1,605 Mil.
Long-Term Debt was $1,662 Mil.
Net Income was 117.3 + 193.3 + 109.8 + 54.2 = $475 Mil.
Non Operating Income was -36.4 + 0.7 + -4.2 + -13 = $-53 Mil.
Cash Flow from Operations was 304.2 + 360.8 + 63.3 + -123.1 = $605 Mil.
|Accounts Receivable was $1,112 Mil.
Revenue was 1447.2 + 1456.9 + 1425.3 + 1250.5 = $5,580 Mil.
Gross Profit was 536.4 + 559 + 552.7 + 488 = $2,136 Mil.
Total Current Assets was $2,271 Mil.
Total Assets was $6,222 Mil.
Property, Plant and Equipment(Net PPE) was $560 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,443 Mil.
Total Current Liabilities was $1,571 Mil.
Long-Term Debt was $1,707 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)|
|=||(1105.1 / 5692.5)||/||(1112.4 / 5579.9)|
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)|
|=||(564.9 / 5579.9)||/||(557 / 5692.5)|
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 - (2285.6 + 539.6) / 6069.7)||/||(1 - (2271.1 + 560.2) / 6222)|
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))|
|=||(163.7 / (163.7 + 560.2))||/||(158.9 / (158.9 + 539.6))|
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)|
|=||(1446.1 / 5692.5)||/||(1443.2 / 5579.9)|
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)|
|=||((1661.6 + 1604.5) / 6069.7)||/||((1706.5 + 1570.8) / 6222)|
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|
|=||(474.6 - -52.9||-||605.2)||/||6069.7|
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.
Newell Rubbermaid Inc has a M-score of -2.56 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
Newell Rubbermaid Inc Annual Data
Newell Rubbermaid Inc Quarterly Data