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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 -2.36. The lowest was -3.29. And the median was -2.70.
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 * 0.9619||+||0.528 * 0.9525||+||0.404 * 0.9945||+||0.892 * 0.991||+||0.115 * 1.0692|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0338||+||4.679 * -0.0331||-||0.327 * 0.9666|
|This Year (Feb17) TTM:||Last Year (Feb16) TTM:|
|Accounts Receivable was $308 Mil.|
Revenue was 769.1 + 786.5 + 758 + 718.8 = $3,032 Mil.
Gross Profit was 255.6 + 261.9 + 263.1 + 229.8 = $1,010 Mil.
Total Current Assets was $819 Mil.
Total Assets was $1,792 Mil.
Property, Plant and Equipment(Net PPE) was $408 Mil.
Depreciation, Depletion and Amortization(DDA) was $60 Mil.
Selling, General & Admin. Expense(SGA) was $809 Mil.
Total Current Liabilities was $523 Mil.
Long-Term Debt was $295 Mil.
Net Income was 25.8 + 41.2 + 38.2 + 19.4 = $125 Mil.
Non Operating Income was 4.1 + 4.5 + 2.1 + 2.6 = $13 Mil.
Cash Flow from Operations was 66.7 + 83.9 + 85.8 + -65.7 = $171 Mil.
|Accounts Receivable was $323 Mil.
Revenue was 747.9 + 787.6 + 819 + 705.5 = $3,060 Mil.
Gross Profit was 234.3 + 253.5 + 266.8 + 216.6 = $971 Mil.
Total Current Assets was $824 Mil.
Total Assets was $1,809 Mil.
Property, Plant and Equipment(Net PPE) was $412 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $790 Mil.
Total Current Liabilities was $558 Mil.
Long-Term Debt was $297 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)|
|=||(307.6 / 3032.4)||/||(322.7 / 3060)|
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)|
|=||(971.2 / 3060)||/||(1010.4 / 3032.4)|
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 - (819.2 + 408.1) / 1792)||/||(1 - (823.9 + 411.6) / 1808.6)|
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))|
|=||(65.7 / (65.7 + 411.6))||/||(60.3 / (60.3 + 408.1))|
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)|
|=||(809.3 / 3032.4)||/||(790 / 3060)|
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)|
|=||((294.6 + 523.4) / 1792)||/||((296.6 + 557.5) / 1808.6)|
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|
|=||(124.6 - 13.3||-||170.7)||/||1792|
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 -2.69 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