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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 -2.17 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Oil-Dri Corp of America was -2.17. The lowest was -3.14. And the median was -2.69.
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 * 0.9364||+||0.528 * 1.1848||+||0.404 * 1.9387||+||0.892 * 1.0628||+||0.115 * 0.9786|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9345||+||4.679 * -0.0451||-||0.327 * 0.8861|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $31.0 Mil.|
Revenue was 66.045 + 67.417 + 69.305 + 63.546 = $266.3 Mil.
Gross Profit was 12.373 + 13.884 + 16.893 + 16.5 = $59.7 Mil.
Total Current Assets was $83.5 Mil.
Total Assets was $186.2 Mil.
Property, Plant and Equipment(Net PPE) was $74.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.4 Mil.
Selling, General & Admin. Expense(SGA) was $47.2 Mil.
Total Current Liabilities was $29.5 Mil.
Long-Term Debt was $18.9 Mil.
Net Income was 0.466 + 0.722 + 4.281 + 2.887 = $8.4 Mil.
Non Operating Income was 0.078 + 0.247 + 0.175 + -0.035 = $0.5 Mil.
Cash Flow from Operations was 5.586 + 8.31 + 3.052 + -0.652 = $16.3 Mil.
|Accounts Receivable was $31.1 Mil.
Revenue was 63.892 + 64.152 + 61.122 + 61.417 = $250.6 Mil.
Gross Profit was 16.108 + 16.891 + 16.269 + 17.231 = $66.5 Mil.
Total Current Assets was $103.4 Mil.
Total Assets was $183.6 Mil.
Property, Plant and Equipment(Net PPE) was $66.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.9 Mil.
Selling, General & Admin. Expense(SGA) was $47.6 Mil.
Total Current Liabilities was $31.4 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)|
|=||(30.997 / 266.313)||/||(31.148 / 250.583)|
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)|
|=||(13.884 / 250.583)||/||(12.373 / 266.313)|
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 - (83.516 + 74.896) / 186.204)||/||(1 - (103.372 + 66.055) / 183.559)|
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))|
|=||(8.946 / (8.946 + 66.055))||/||(10.396 / (10.396 + 74.896))|
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)|
|=||(47.232 / 266.313)||/||(47.558 / 250.583)|
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 + 29.5) / 186.204)||/||((22.4 + 31.447) / 183.559)|
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|
|=||(8.356 - 0.465||-||16.296)||/||186.204|
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 -2.17 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