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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 St Jude Medical Inc was -1.82. The lowest was -2.85. And the median was -2.54.
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 St Jude Medical 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 * 0.8664||+||0.528 * 1.0159||+||0.404 * 1.0932||+||0.892 * 1.0141||+||0.115 * 0.9294|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0082||+||4.679 * -0.0266||-||0.327 * 0.9709|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,194 Mil.|
Revenue was 1345 + 1439 + 1372 + 1448 = $5,604 Mil.
Gross Profit was 950 + 1014 + 960 + 1015 = $3,939 Mil.
Total Current Assets was $3,193 Mil.
Total Assets was $9,414 Mil.
Property, Plant and Equipment(Net PPE) was $1,308 Mil.
Depreciation, Depletion and Amortization(DDA) was $312 Mil.
Selling, General & Admin. Expense(SGA) was $1,821 Mil.
Total Current Liabilities was $2,766 Mil.
Long-Term Debt was $1,767 Mil.
Net Income was 262 + 245 + 238 + 270 = $1,015 Mil.
Non Operating Income was 3 + -2 + 0 + -1 = $0 Mil.
Cash Flow from Operations was 234 + 400 + 340 + 291 = $1,265 Mil.
|Accounts Receivable was $1,359 Mil.
Revenue was 1363 + 1422 + 1338 + 1403 = $5,526 Mil.
Gross Profit was 980 + 992 + 953 + 1021 = $3,946 Mil.
Total Current Assets was $3,979 Mil.
Total Assets was $10,291 Mil.
Property, Plant and Equipment(Net PPE) was $1,399 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $1,781 Mil.
Total Current Liabilities was $1,257 Mil.
Long-Term Debt was $3,847 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)|
|=||(1194 / 5604)||/||(1359 / 5526)|
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)|
|=||(1014 / 5526)||/||(950 / 5604)|
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 - (3193 + 1308) / 9414)||/||(1 - (3979 + 1399) / 10291)|
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))|
|=||(305 / (305 + 1399))||/||(312 / (312 + 1308))|
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)|
|=||(1821 / 5604)||/||(1781 / 5526)|
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)|
|=||((1767 + 2766) / 9414)||/||((3847 + 1257) / 10291)|
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|
|=||(1015 - 0||-||1265)||/||9414|
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.
St Jude Medical Inc has a M-score of -2.67 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
St Jude Medical Inc Annual Data
St Jude Medical Inc Quarterly Data