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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 -3.24. And the median was -2.72.
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 * 0.8605||+||0.528 * 1.2165||+||0.404 * 1.077||+||0.892 * 1.0125||+||0.115 * 0.9472|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9512||+||4.679 * -0.1015||-||0.327 * 0.896|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $32.3 Mil.|
Revenue was 64.643 + 66.044 + 66.045 + 67.417 = $264.1 Mil.
Gross Profit was 15.233 + 13.769 + 12.373 + 13.884 = $55.3 Mil.
Total Current Assets was $77.0 Mil.
Total Assets was $184.3 Mil.
Property, Plant and Equipment(Net PPE) was $79.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.5 Mil.
Selling, General & Admin. Expense(SGA) was $45.5 Mil.
Total Current Liabilities was $27.7 Mil.
Long-Term Debt was $15.4 Mil.
Net Income was 2.797 + 2.12 + 0.466 + 0.722 = $6.1 Mil.
Non Operating Income was -0.09 + 0.084 + 0.078 + 0.247 = $0.3 Mil.
Cash Flow from Operations was 8.859 + 1.748 + 5.586 + 8.31 = $24.5 Mil.
|Accounts Receivable was $37.0 Mil.
Revenue was 69.305 + 63.546 + 63.892 + 64.152 = $260.9 Mil.
Gross Profit was 16.893 + 16.5 + 16.108 + 16.891 = $66.4 Mil.
Total Current Assets was $89.4 Mil.
Total Assets was $183.9 Mil.
Property, Plant and Equipment(Net PPE) was $69.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.3 Mil.
Selling, General & Admin. Expense(SGA) was $47.2 Mil.
Total Current Liabilities was $29.1 Mil.
Long-Term Debt was $18.9 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)|
|=||(32.255 / 264.149)||/||(37.022 / 260.895)|
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)|
|=||(13.769 / 260.895)||/||(15.233 / 264.149)|
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 - (77.028 + 79.702) / 184.314)||/||(1 - (89.353 + 68.959) / 183.86)|
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))|
|=||(9.331 / (9.331 + 68.959))||/||(11.472 / (11.472 + 79.702))|
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)|
|=||(45.476 / 264.149)||/||(47.221 / 260.895)|
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)|
|=||((15.417 + 27.72) / 184.314)||/||((18.9 + 29.127) / 183.86)|
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|
|=||(6.105 - 0.319||-||24.503)||/||184.314|
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 -2.89 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