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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 Newell Rubbermaid Inc was -1.27. 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 * 0.9743||+||0.528 * 0.9876||+||0.404 * 0.9798||+||0.892 * 1.0379||+||0.115 * 1.0171|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0494||+||4.679 * -0.0219||-||0.327 * 1.098|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,171 Mil.|
Revenue was 1530 + 1560.9 + 1264 + 1526 = $5,881 Mil.
Gross Profit was 598.9 + 621 + 487.5 + 574.1 = $2,282 Mil.
Total Current Assets was $2,586 Mil.
Total Assets was $6,794 Mil.
Property, Plant and Equipment(Net PPE) was $594 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,597 Mil.
Total Current Liabilities was $2,141 Mil.
Long-Term Debt was $2,097 Mil.
Net Income was 134.2 + 148.5 + 54.1 + 52 = $389 Mil.
Non Operating Income was -9.3 + 5 + -0.1 + -37.1 = $-42 Mil.
Cash Flow from Operations was 339.9 + 102.5 + -154.3 + 290.8 = $579 Mil.
|Accounts Receivable was $1,158 Mil.
Revenue was 1484.5 + 1502.2 + 1214.3 + 1465.3 = $5,666 Mil.
Gross Profit was 576.7 + 595.6 + 457 + 541.7 = $2,171 Mil.
Total Current Assets was $2,377 Mil.
Total Assets was $6,349 Mil.
Property, Plant and Equipment(Net PPE) was $525 Mil.
Depreciation, Depletion and Amortization(DDA) was $154 Mil.
Selling, General & Admin. Expense(SGA) was $1,467 Mil.
Total Current Liabilities was $2,189 Mil.
Long-Term Debt was $1,419 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)|
|=||(1171.3 / 5880.9)||/||(1158.3 / 5666.3)|
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)|
|=||(621 / 5666.3)||/||(598.9 / 5880.9)|
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 - (2586.4 + 594.1) / 6793.9)||/||(1 - (2377.4 + 525.3) / 6349.2)|
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))|
|=||(153.9 / (153.9 + 525.3))||/||(170.3 / (170.3 + 594.1))|
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)|
|=||(1597.3 / 5880.9)||/||(1466.6 / 5666.3)|
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)|
|=||((2097 + 2141.2) / 6793.9)||/||((1418.7 + 2188.7) / 6349.2)|
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|
|=||(388.8 - -41.5||-||578.9)||/||6793.9|
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 -2.63 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