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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 8 years, the highest Beneish M-Score of SodaStream International Ltd was -1.60. The lowest was -3.09. And the median was -2.28.
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 SodaStream International Ltd 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 * 0.9743||+||0.528 * 0.941||+||0.404 * 0.9403||+||0.892 * 1.0714||+||0.115 * 1.0678|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9031||+||4.679 * -0.0934||-||0.327 * 0.7346|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $74.0 Mil.|
Revenue was 124.228 + 119.164 + 100.873 + 112.942 = $457.2 Mil.
Gross Profit was 64.339 + 60.469 + 51.172 + 52.033 = $228.0 Mil.
Total Current Assets was $265.5 Mil.
Total Assets was $478.4 Mil.
Property, Plant and Equipment(Net PPE) was $167.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.9 Mil.
Selling, General & Admin. Expense(SGA) was $180.6 Mil.
Total Current Liabilities was $88.3 Mil.
Long-Term Debt was $11.3 Mil.
Net Income was 14.91 + 7.815 + 6.093 + 2.828 = $31.6 Mil.
Non Operating Income was -0.095 + -0.409 + -0.871 + 0.372 = $-1.0 Mil.
Cash Flow from Operations was 29.999 + 22.756 + 13.037 + 11.527 = $77.3 Mil.
|Accounts Receivable was $70.9 Mil.
Revenue was 110.015 + 99.834 + 90.344 + 126.526 = $426.7 Mil.
Gross Profit was 50.76 + 48.527 + 45.451 + 55.508 = $200.2 Mil.
Total Current Assets was $266.1 Mil.
Total Assets was $465.6 Mil.
Property, Plant and Equipment(Net PPE) was $152.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.5 Mil.
Selling, General & Admin. Expense(SGA) was $186.6 Mil.
Total Current Liabilities was $111.7 Mil.
Long-Term Debt was $20.2 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)|
|=||(74.042 / 457.207)||/||(70.928 / 426.719)|
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)|
|=||(200.246 / 426.719)||/||(228.013 / 457.207)|
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 - (265.521 + 167.042) / 478.368)||/||(1 - (266.145 + 152.08) / 465.64)|
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))|
|=||(17.507 / (17.507 + 152.08))||/||(17.878 / (17.878 + 167.042))|
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)|
|=||(180.581 / 457.207)||/||(186.616 / 426.719)|
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)|
|=||((11.273 + 88.334) / 478.368)||/||((20.241 + 111.738) / 465.64)|
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|
|=||(31.646 - -1.003||-||77.319)||/||478.368|
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.
SodaStream International Ltd has a M-score of -2.82 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
SodaStream International Ltd Annual Data
SodaStream International Ltd Quarterly Data