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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 Spartech Corporation was 0.00. The lowest was 0.00. And the median was 0.00.
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 Spartech Corporation 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 * 0.9231||+||0.528 * 0.9116||+||0.404 * 0.9937||+||0.892 * 1.0427||+||0.115 * 0.9862|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0998||+||4.679 * -0.0765||-||0.327 * 0.97|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Oct12) TTM:||Last Year (Oct11) TTM:|
|Accounts Receivable was $151 Mil.|
Revenue was 286.804 + 282.447 + 298.323 + 281.781 = $1,149 Mil.
Gross Profit was 32.737 + 27.132 + 29.823 + 21.672 = $111 Mil.
Total Current Assets was $284 Mil.
Total Assets was $545 Mil.
Property, Plant and Equipment(Net PPE) was $197 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $85 Mil.
Total Current Liabilities was $204 Mil.
Long-Term Debt was $112 Mil.
Net Income was -0.663 + 1.838 + 3.671 + -2.249 = $3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 15.176 + 20.304 + 15.507 + -6.714 = $44 Mil.
|Accounts Receivable was $156 Mil.
Revenue was 293.24 + 291.716 + 282.551 + 234.783 = $1,102 Mil.
Gross Profit was 25.214 + 26.665 + 27.077 + 18.406 = $97 Mil.
Total Current Assets was $278 Mil.
Total Assets was $550 Mil.
Property, Plant and Equipment(Net PPE) was $208 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $74 Mil.
Total Current Liabilities was $197 Mil.
Long-Term Debt was $132 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)|
|=||(150.566 / 1149.355)||/||(156.432 / 1102.29)|
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)|
|=||(27.132 / 1102.29)||/||(32.737 / 1149.355)|
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 - (284.226 + 197.373) / 544.633)||/||(1 - (277.606 + 208.074) / 549.702)|
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))|
|=||(32.824 / (32.824 + 208.074))||/||(31.641 / (31.641 + 197.373))|
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)|
|=||(85.227 / 1149.355)||/||(74.318 / 1102.29)|
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)|
|=||((112.288 + 203.661) / 544.633)||/||((132 + 196.758) / 549.702)|
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|
|=||(2.597 - 0||-||44.273)||/||544.633|
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.
Spartech Corporation has a M-score of -2.93 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
Spartech Corporation Annual Data
Spartech Corporation Quarterly Data