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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 Oil-Dri Corp of America was -1.94. The lowest was -3.34. And the median was -2.70.
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 Oil-Dri Corp of America 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 * 1.0554||+||0.528 * 0.9068||+||0.404 * 1.1576||+||0.892 * 0.9889||+||0.115 * 0.9735|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3437||+||4.679 * -0.0308||-||0.327 * 0.8371|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $32.0 Mil.|
Revenue was 65.174 + 66.612 + 64.916 + 64.235 = $260.9 Mil.
Gross Profit was 19.125 + 20.725 + 18.866 + 18.568 = $77.3 Mil.
Total Current Assets was $92.8 Mil.
Total Assets was $206.6 Mil.
Property, Plant and Equipment(Net PPE) was $81.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.7 Mil.
Selling, General & Admin. Expense(SGA) was $66.4 Mil.
Total Current Liabilities was $29.5 Mil.
Long-Term Debt was $9.1 Mil.
Net Income was 4.25 + 2.009 + 5.261 + -0.892 = $10.6 Mil.
Non Operating Income was -0.113 + -0.124 + -0.235 + 0.25 = $-0.2 Mil.
Cash Flow from Operations was 7.768 + 1.325 + 5.762 + 2.358 = $17.2 Mil.
|Accounts Receivable was $30.7 Mil.
Revenue was 65.367 + 67.795 + 65.519 + 65.196 = $263.9 Mil.
Gross Profit was 19.062 + 20.653 + 16.722 + 14.433 = $70.9 Mil.
Total Current Assets was $92.7 Mil.
Total Assets was $199.1 Mil.
Property, Plant and Equipment(Net PPE) was $79.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $50.0 Mil.
Total Current Liabilities was $32.2 Mil.
Long-Term Debt was $12.3 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)|
|=||(32.047 / 260.937)||/||(30.708 / 263.877)|
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)|
|=||(70.87 / 263.877)||/||(77.284 / 260.937)|
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 - (92.778 + 81.498) / 206.574)||/||(1 - (92.72 + 79.449) / 199.055)|
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))|
|=||(11.972 / (11.972 + 79.449))||/||(12.667 / (12.667 + 81.498))|
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)|
|=||(66.414 / 260.937)||/||(49.982 / 263.877)|
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)|
|=||((9.147 + 29.498) / 206.574)||/||((12.333 + 32.154) / 199.055)|
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|
|=||(10.628 - -0.222||-||17.213)||/||206.574|
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.
Oil-Dri Corp of America 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
Oil-Dri Corp of America Annual Data
Oil-Dri Corp of America Quarterly Data