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Beneish M-Score -1.2 higher than -2.22, which implies that it might have manipulated its financial results.
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 Brands Inc was -1.20. The lowest was -3.42. And the median was -2.64.
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 Brands 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 * 1.3025||+||0.528 * 1.1939||+||0.404 * 1.367||+||0.892 * 1.8176||+||0.115 * 1.1858|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9393||+||4.679 * -0.0199||-||0.327 * 0.7504|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2,773 Mil.|
Revenue was 3954.6 + 3858.6 + 1314.9 + 1560.8 = $10,689 Mil.
Gross Profit was 1274.8 + 1095.7 + 505.6 + 597.2 = $3,473 Mil.
Total Current Assets was $7,881 Mil.
Total Assets was $34,416 Mil.
Property, Plant and Equipment(Net PPE) was $1,514 Mil.
Depreciation, Depletion and Amortization(DDA) was $350 Mil.
Selling, General & Admin. Expense(SGA) was $2,727 Mil.
Total Current Liabilities was $4,067 Mil.
Long-Term Debt was $12,043 Mil.
Net Income was 186.5 + 135.2 + 40.5 + 13.2 = $375 Mil.
Non Operating Income was 0.7 + 159.3 + -44.4 + -169.6 = $-54 Mil.
Cash Flow from Operations was 511.4 + 596.5 + -270.9 + 277.7 = $1,115 Mil.
|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.
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)|
|=||(2772.9 / 10688.9)||/||(1171.3 / 5880.9)|
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)|
|=||(2281.5 / 5880.9)||/||(3473.3 / 10688.9)|
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 - (7880.5 + 1513.7) / 34415.5)||/||(1 - (2586.4 + 594.1) / 6793.9)|
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))|
|=||(170.3 / (170.3 + 594.1))||/||(350.2 / (350.2 + 1513.7))|
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)|
|=||(2727.1 / 10688.9)||/||(1597.3 / 5880.9)|
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)|
|=||((12043.3 + 4066.5) / 34415.5)||/||((2097 + 2141.2) / 6793.9)|
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|
|=||(375.4 - -54||-||1114.7)||/||34415.5|
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 Brands Inc has a M-score of -1.20 signals that the company is likely to 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 Brands Inc Annual Data
Newell Brands Inc Quarterly Data