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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 Sanofi was 1.19. The lowest was -3.72. And the median was -2.82.
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 Sanofi 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||+||0.528 * 0.9894||+||0.404 * 1.0118||+||0.892 * 1.0098||+||0.115 * 1.1682|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.034||+||4.679 * -0.0598||-||0.327 * 1.0648|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $8,815 Mil.|
Revenue was 11307.02836 + 11427.8350515 + 11067.9347826 + 10961.2724758 = $44,764 Mil.
Gross Profit was 7557.33662145 + 7737.11340206 + 7524.45652174 + 7481.32780083 = $30,300 Mil.
Total Current Assets was $28,887 Mil.
Total Assets was $120,089 Mil.
Property, Plant and Equipment(Net PPE) was $12,819 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,008 Mil.
Selling, General & Admin. Expense(SGA) was $11,953 Mil.
Total Current Liabilities was $16,069 Mil.
Long-Term Debt was $16,370 Mil.
Net Income was 1651.04808878 + 1533.50515464 + 1055.70652174 + 1499.30843707 = $5,740 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 9482.12083847 + 0 + 3442.93478261 + 0 = $12,925 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 11721.5363512 + 11372.4966622 + 10667.5461741 + 10566.0621762 = $44,328 Mil.
Gross Profit was 7740.74074074 + 7539.3858478 + 7141.16094987 + 7265.54404145 = $29,687 Mil.
Total Current Assets was $32,801 Mil.
Total Assets was $131,776 Mil.
Property, Plant and Equipment(Net PPE) was $13,967 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,004 Mil.
Selling, General & Admin. Expense(SGA) was $11,447 Mil.
Total Current Liabilities was $19,145 Mil.
Long-Term Debt was $14,285 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)|
|=||(8815.0431566 / 44764.07067)||/||(0 / 44327.6413637)|
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)|
|=||(7737.11340206 / 44327.6413637)||/||(7557.33662145 / 44764.07067)|
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 - (28886.5598027 + 12818.7422935) / 120088.779285)||/||(1 - (32801.0973937 + 13967.0781893) / 131776.406036)|
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))|
|=||(13003.6442711 / (13003.6442711 + 13967.0781893))||/||(9008.10375841 / (9008.10375841 + 12818.7422935))|
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)|
|=||(11952.9671658 / 44764.07067)||/||(11446.9874729 / 44327.6413637)|
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)|
|=||((16369.9136868 + 16069.0505549) / 120088.779285)||/||((14285.3223594 + 19145.4046639) / 131776.406036)|
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|
|=||(5739.56820223 - 0||-||12925.0556211)||/||120088.779285|
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.
Sanofi has a M-score of -2.76 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
Sanofi Annual Data
Sanofi Quarterly Data