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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 -3.86 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Primo Water Corp was -2.28. The lowest was -10.23. And the median was -3.86.
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 * 0.7718||+||0.528 * 0.934||+||0.404 * 1.0393||+||0.892 * 0.997||+||0.115 * 0.9227|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8581||+||4.679 * -0.2443||-||0.327 * 1.0734|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $7.61 Mil.|
Revenue was 19.513 + 25.519 + 23.849 + 22.328 = $91.21 Mil.
Gross Profit was 5.07 + 6.583 + 5.901 + 5.289 = $22.84 Mil.
Total Current Assets was $15.85 Mil.
Total Assets was $70.97 Mil.
Property, Plant and Equipment(Net PPE) was $38.63 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.33 Mil.
Selling, General & Admin. Expense(SGA) was $15.15 Mil.
Total Current Liabilities was $14.43 Mil.
Long-Term Debt was $22.65 Mil.
Net Income was -3.756 + -2.085 + -2.272 + -2.593 = $-10.71 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -2.444 + 3.332 + 1.755 + 3.99 = $6.63 Mil.
|Accounts Receivable was $9.89 Mil.
Revenue was 20.885 + 26.158 + 24.635 + 19.801 = $91.48 Mil.
Gross Profit was 4.885 + 6.29 + 4.951 + 5.273 = $21.40 Mil.
Total Current Assets was $21.55 Mil.
Total Assets was $81.78 Mil.
Property, Plant and Equipment(Net PPE) was $41.95 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.10 Mil.
Selling, General & Admin. Expense(SGA) was $17.71 Mil.
Total Current Liabilities was $18.56 Mil.
Long-Term Debt was $21.25 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)|
|=||(7.614 / 91.209)||/||(9.894 / 91.479)|
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)|
|=||(6.583 / 91.479)||/||(5.07 / 91.209)|
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 - (15.853 + 38.634) / 70.971)||/||(1 - (21.553 + 41.947) / 81.775)|
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))|
|=||(11.102 / (11.102 + 41.947))||/||(11.333 / (11.333 + 38.634))|
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)|
|=||(15.151 / 91.209)||/||(17.708 / 91.479)|
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)|
|=||((22.654 + 14.431) / 70.971)||/||((21.251 + 18.559) / 81.775)|
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|
|=||(-10.706 - 0||-||6.633)||/||70.971|
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 -3.86 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