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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.
St Jude Medical Inc has a M-score of -2.69 suggests that the company is not a 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 * 0.9273||+||0.528 * 1.0129||+||0.404 * 1.0237||+||0.892 * 1.0283||+||0.115 * 0.9175|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0138||+||4.679 * -0.0307||-||0.327 * 1.1043|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,334 Mil.|
Revenue was 1372 + 1448 + 1363 + 1422 = $5,605 Mil.
Gross Profit was 960 + 1015 + 980 + 992 = $3,947 Mil.
Total Current Assets was $3,836 Mil.
Total Assets was $10,236 Mil.
Property, Plant and Equipment(Net PPE) was $1,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $1,939 Mil.
Total Current Liabilities was $1,988 Mil.
Long-Term Debt was $3,054 Mil.
Net Income was 238 + 270 + 249 + 123 = $880 Mil.
Non Operating Income was 0 + -1 + 0 + 1 = $0 Mil.
Cash Flow from Operations was 340 + 291 + 273 + 290 = $1,194 Mil.
|Accounts Receivable was $1,399 Mil.
Revenue was 1338 + 1403 + 1338 + 1372 = $5,451 Mil.
Gross Profit was 953 + 1021 + 961 + 953 = $3,888 Mil.
Total Current Assets was $3,745 Mil.
Total Assets was $9,965 Mil.
Property, Plant and Equipment(Net PPE) was $1,427 Mil.
Depreciation, Depletion and Amortization(DDA) was $292 Mil.
Selling, General & Admin. Expense(SGA) was $1,860 Mil.
Total Current Liabilities was $1,042 Mil.
Long-Term Debt was $3,403 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)|
|=||(1334 / 5605)||/||(1399 / 5451)|
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)|
|=||(1015 / 5451)||/||(960 / 5605)|
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 - (3836 + 1360) / 10236)||/||(1 - (3745 + 1427) / 9965)|
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))|
|=||(292 / (292 + 1427))||/||(309 / (309 + 1360))|
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)|
|=||(1939 / 5605)||/||(1860 / 5451)|
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)|
|=||((3054 + 1988) / 10236)||/||((3403 + 1042) / 9965)|
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|
|=||(880 - 0||-||1194)||/||10236|
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 -2.69 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
St Jude Medical Inc Annual Data
St Jude Medical Inc Quarterly Data