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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.
Primo Water Corp has a M-score of -4.00 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Primo Water Corp was -1.85. The lowest was -10.60. And the median was -4.00.
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 Primo Water Corp 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 * 1.0553||+||0.528 * 0.9305||+||0.404 * 0.9113||+||0.892 * 1.0235||+||0.115 * 0.9328|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9214||+||4.679 * -0.3027||-||0.327 * 1.3314|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $10.28 Mil.|
Revenue was 26.853 + 23.528 + 19.513 + 25.519 = $95.41 Mil.
Gross Profit was 6.762 + 6.186 + 5.07 + 6.583 = $24.60 Mil.
Total Current Assets was $21.24 Mil.
Total Assets was $72.39 Mil.
Property, Plant and Equipment(Net PPE) was $35.53 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.31 Mil.
Selling, General & Admin. Expense(SGA) was $15.69 Mil.
Total Current Liabilities was $22.26 Mil.
Long-Term Debt was $24.79 Mil.
Net Income was -6.406 + -3.753 + -3.756 + -2.085 = $-16.00 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 0.581 + 4.447 + -2.444 + 3.332 = $5.92 Mil.
|Accounts Receivable was $9.52 Mil.
Revenue was 23.849 + 22.328 + 20.885 + 26.158 = $93.22 Mil.
Gross Profit was 5.901 + 5.289 + 4.885 + 6.29 = $22.37 Mil.
Total Current Assets was $18.78 Mil.
Total Assets was $76.91 Mil.
Property, Plant and Equipment(Net PPE) was $39.92 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.60 Mil.
Selling, General & Admin. Expense(SGA) was $16.64 Mil.
Total Current Liabilities was $18.56 Mil.
Long-Term Debt was $18.98 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)|
|=||(10.283 / 95.413)||/||(9.52 / 93.22)|
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)|
|=||(6.186 / 93.22)||/||(6.762 / 95.413)|
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 - (21.239 + 35.532) / 72.39)||/||(1 - (18.779 + 39.92) / 76.907)|
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))|
|=||(11.6 / (11.6 + 39.92))||/||(11.305 / (11.305 + 35.532))|
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)|
|=||(15.694 / 95.413)||/||(16.641 / 93.22)|
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)|
|=||((24.79 + 22.255) / 72.39)||/||((18.979 + 18.56) / 76.907)|
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|
|=||(-16 - 0||-||5.916)||/||72.39|
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.
Primo Water Corp has a M-score of -4.00 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
Primo Water Corp Annual Data
Primo Water Corp Quarterly Data