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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 Steelcase Inc was -2.35. The lowest was -3.65. 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 Steelcase Inc 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 * 0.9764||+||0.528 * 0.9272||+||0.404 * 1.1372||+||0.892 * 1.0103||+||0.115 * 0.994|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0416||+||4.679 * -0.0029||-||0.327 * 0.9317|
|This Year (May16) TTM:||Last Year (May15) TTM:|
|Accounts Receivable was $327 Mil.|
Revenue was 718.8 + 747.9 + 787.6 + 819 = $3,073 Mil.
Gross Profit was 229.8 + 234.3 + 253.5 + 266.8 = $984 Mil.
Total Current Assets was $720 Mil.
Total Assets was $1,676 Mil.
Property, Plant and Equipment(Net PPE) was $413 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $801 Mil.
Total Current Liabilities was $436 Mil.
Long-Term Debt was $296 Mil.
Net Income was 19.4 + 77.5 + 35.6 + 37.2 = $170 Mil.
Non Operating Income was 2.6 + 8.7 + 4 + 2.7 = $18 Mil.
Cash Flow from Operations was -65.7 + 55.9 + 76.8 + 89.5 = $157 Mil.
|Accounts Receivable was $332 Mil.
Revenue was 705.5 + 749.9 + 800 + 786.7 = $3,042 Mil.
Gross Profit was 216.6 + 227.6 + 214.9 + 244.4 = $904 Mil.
Total Current Assets was $783 Mil.
Total Assets was $1,648 Mil.
Property, Plant and Equipment(Net PPE) was $395 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $761 Mil.
Total Current Liabilities was $493 Mil.
Long-Term Debt was $279 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)|
|=||(327.2 / 3073.3)||/||(331.7 / 3042.1)|
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)|
|=||(903.5 / 3042.1)||/||(984.4 / 3073.3)|
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 - (719.9 + 412.6) / 1675.9)||/||(1 - (783.2 + 394.9) / 1648)|
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))|
|=||(61.4 / (61.4 + 394.9))||/||(64.6 / (64.6 + 412.6))|
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)|
|=||(801 / 3073.3)||/||(761.2 / 3042.1)|
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)|
|=||((296.3 + 435.5) / 1675.9)||/||((279.3 + 493.1) / 1648)|
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|
|=||(169.7 - 18||-||156.5)||/||1675.9|
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.
Steelcase Inc has a M-score of -2.47 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
Steelcase Inc Annual Data
Steelcase Inc Quarterly Data