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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 Brands Inc was -1.27. 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 * 1.0918||+||0.528 * 0.9934||+||0.404 * 0.5023||+||0.892 * 1.0329||+||0.115 * 1.0244|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0046||+||4.679 * 0.0099||-||0.327 * 1.3325|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,188 Mil.|
Revenue was 1314.9 + 1560.8 + 1530 + 1560.9 = $5,967 Mil.
Gross Profit was 505.6 + 597.2 + 598.9 + 621 = $2,323 Mil.
Total Current Assets was $10,489 Mil.
Total Assets was $15,333 Mil.
Property, Plant and Equipment(Net PPE) was $625 Mil.
Depreciation, Depletion and Amortization(DDA) was $172 Mil.
Selling, General & Admin. Expense(SGA) was $1,627 Mil.
Total Current Liabilities was $2,195 Mil.
Long-Term Debt was $10,607 Mil.
Net Income was 40.5 + 13.2 + 134.2 + 148.5 = $336 Mil.
Non Operating Income was -44.4 + -169.6 + -9.3 + -41.2 = $-265 Mil.
Cash Flow from Operations was -270.9 + 277.7 + 339.9 + 102.5 = $449 Mil.
|Accounts Receivable was $1,053 Mil.
Revenue was 1264 + 1526 + 1484.5 + 1502.2 = $5,777 Mil.
Gross Profit was 487.5 + 574.1 + 576.7 + 595.6 = $2,234 Mil.
Total Current Assets was $2,423 Mil.
Total Assets was $6,605 Mil.
Property, Plant and Equipment(Net PPE) was $563 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General & Admin. Expense(SGA) was $1,568 Mil.
Total Current Liabilities was $2,044 Mil.
Long-Term Debt was $2,094 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)|
|=||(1187.7 / 5966.6)||/||(1053.2 / 5776.7)|
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)|
|=||(597.2 / 5776.7)||/||(505.6 / 5966.6)|
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 - (10488.9 + 624.5) / 15332.8)||/||(1 - (2423 + 563.3) / 6604.6)|
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))|
|=||(160.2 / (160.2 + 563.3))||/||(172.2 / (172.2 + 624.5))|
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)|
|=||(1626.5 / 5966.6)||/||(1567.6 / 5776.7)|
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)|
|=||((10606.6 + 2194.9) / 15332.8)||/||((2094.1 + 2044.2) / 6604.6)|
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|
|=||(336.4 - -264.5||-||449.2)||/||15332.8|
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 -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 Brands Inc Annual Data
Newell Brands Inc Quarterly Data