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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.
Oil-Dri Corp of America has a M-score of -2.12 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Oil-Dri Corp of America was -1.94. The lowest was -3.37. And the median was -2.71.
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 * 1.0348||+||0.528 * 1.1089||+||0.404 * 1.5567||+||0.892 * 1.066||+||0.115 * 1.0019|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9117||+||4.679 * -0.0136||-||0.327 * 0.9057|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $32.9 Mil.|
Revenue was 67.417 + 69.305 + 63.546 + 63.892 = $264.2 Mil.
Gross Profit was 13.884 + 16.893 + 16.5 + 16.108 = $63.4 Mil.
Total Current Assets was $87.8 Mil.
Total Assets was $184.6 Mil.
Property, Plant and Equipment(Net PPE) was $72.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.9 Mil.
Selling, General & Admin. Expense(SGA) was $47.9 Mil.
Total Current Liabilities was $29.8 Mil.
Long-Term Debt was $18.9 Mil.
Net Income was 0.722 + 4.281 + 2.887 + 4.737 = $12.6 Mil.
Non Operating Income was 0.247 + 0.175 + -0.035 + -0.054 = $0.3 Mil.
Cash Flow from Operations was 8.31 + 3.052 + -0.652 + 4.092 = $14.8 Mil.
|Accounts Receivable was $29.8 Mil.
Revenue was 64.152 + 61.122 + 61.417 + 61.116 = $247.8 Mil.
Gross Profit was 16.891 + 16.269 + 17.231 + 15.543 = $65.9 Mil.
Total Current Assets was $99.4 Mil.
Total Assets was $180.9 Mil.
Property, Plant and Equipment(Net PPE) was $65.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.0 Mil.
Selling, General & Admin. Expense(SGA) was $49.3 Mil.
Total Current Liabilities was $30.3 Mil.
Long-Term Debt was $22.4 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)|
|=||(32.854 / 264.16)||/||(29.784 / 247.807)|
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)|
|=||(16.893 / 247.807)||/||(13.884 / 264.16)|
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 - (87.757 + 71.969) / 184.637)||/||(1 - (99.421 + 65.758) / 180.854)|
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))|
|=||(9.027 / (9.027 + 65.758))||/||(9.858 / (9.858 + 71.969))|
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)|
|=||(47.906 / 264.16)||/||(49.291 / 247.807)|
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)|
|=||((18.9 + 29.794) / 184.637)||/||((22.4 + 30.263) / 180.854)|
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|
|=||(12.627 - 0.333||-||14.802)||/||184.637|
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 -2.12 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
Oil-Dri Corp of America Annual Data
Oil-Dri Corp of America Quarterly Data