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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 -2.58 suggests that the company is not a 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 -2.67.
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 * 0.9337||+||0.528 * 0.9959||+||0.404 * 1.012||+||0.892 * 1.0204||+||0.115 * 1.0218|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.997||+||4.679 * -0.0138||-||0.327 * 0.9865|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $973 Mil.|
Revenue was 1232.2 + 1489.8 + 1487.2 + 1474.7 = $5,684 Mil.
Gross Profit was 469.3 + 557 + 564.9 + 582.7 = $2,174 Mil.
Total Current Assets was $2,231 Mil.
Total Assets was $5,994 Mil.
Property, Plant and Equipment(Net PPE) was $541 Mil.
Depreciation, Depletion and Amortization(DDA) was $157 Mil.
Selling, General & Admin. Expense(SGA) was $1,457 Mil.
Total Current Liabilities was $1,553 Mil.
Long-Term Debt was $1,667 Mil.
Net Income was 52.9 + 117.3 + 193.3 + 109.8 = $473 Mil.
Non Operating Income was -40 + -36.4 + 0.7 + -4.2 = $-80 Mil.
Cash Flow from Operations was -92.1 + 304.2 + 360.8 + 63.3 = $636 Mil.
|Accounts Receivable was $1,021 Mil.
Revenue was 1240.8 + 1447.2 + 1456.9 + 1425.3 = $5,570 Mil.
Gross Profit was 473.6 + 536.4 + 559 + 552.7 = $2,122 Mil.
Total Current Assets was $2,357 Mil.
Total Assets was $6,197 Mil.
Property, Plant and Equipment(Net PPE) was $550 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,432 Mil.
Total Current Liabilities was $1,675 Mil.
Long-Term Debt was $1,700 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)|
|=||(973.1 / 5683.9)||/||(1021.3 / 5570.2)|
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)|
|=||(557 / 5570.2)||/||(469.3 / 5683.9)|
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 - (2231.3 + 541.3) / 5993.9)||/||(1 - (2356.6 + 549.5) / 6197.2)|
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))|
|=||(164.1 / (164.1 + 549.5))||/||(157.2 / (157.2 + 541.3))|
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)|
|=||(1456.8 / 5683.9)||/||(1431.9 / 5570.2)|
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)|
|=||((1666.7 + 1552.8) / 5993.9)||/||((1699.6 + 1674.6) / 6197.2)|
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|
|=||(473.3 - -79.9||-||636.2)||/||5993.9|
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 -2.58 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