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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 Constellation Brands Inc was -1.60. The lowest was -3.45. And the median was -2.43.
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 Constellation Brands 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 * 1.1259||+||0.528 * 0.952||+||0.404 * 0.9977||+||0.892 * 1.0863||+||0.115 * 1.1267|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0049||+||4.679 * -0.0241||-||0.327 * 0.984|
|This Year (Feb16) TTM:||Last Year (Feb15) TTM:|
|Accounts Receivable was $733 Mil.|
Revenue was 1543.2 + 1640.5 + 1733.4 + 1631.3 = $6,548 Mil.
Gross Profit was 696.1 + 733.5 + 775.6 + 737.1 = $2,942 Mil.
Total Current Assets was $2,978 Mil.
Total Assets was $16,965 Mil.
Property, Plant and Equipment(Net PPE) was $3,333 Mil.
Depreciation, Depletion and Amortization(DDA) was $221 Mil.
Selling, General & Admin. Expense(SGA) was $1,177 Mil.
Total Current Liabilities was $2,272 Mil.
Long-Term Debt was $6,816 Mil.
Net Income was 243.4 + 270.5 + 302.4 + 238.6 = $1,055 Mil.
Non Operating Income was 22.6 + 27.3 + -0.9 + 1 = $50 Mil.
Cash Flow from Operations was 322.1 + 288.5 + 597.4 + 205.7 = $1,414 Mil.
|Accounts Receivable was $599 Mil.
Revenue was 1356.2 + 1541.7 + 1604.1 + 1526 = $6,028 Mil.
Gross Profit was 597.6 + 638.9 + 672 + 670.1 = $2,579 Mil.
Total Current Assets was $2,911 Mil.
Total Assets was $15,093 Mil.
Property, Plant and Equipment(Net PPE) was $2,682 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,078 Mil.
Total Current Liabilities was $1,131 Mil.
Long-Term Debt was $7,086 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)|
|=||(732.5 / 6548.4)||/||(598.9 / 6028)|
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)|
|=||(733.5 / 6028)||/||(696.1 / 6548.4)|
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 - (2977.6 + 3333.4) / 16965)||/||(1 - (2910.8 + 2681.6) / 15093)|
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))|
|=||(202 / (202 + 2681.6))||/||(221 / (221 + 3333.4))|
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)|
|=||(1177.2 / 6548.4)||/||(1078.4 / 6028)|
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)|
|=||((6816.2 + 2272.3) / 16965)||/||((7086 + 1130.7) / 15093)|
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|
|=||(1054.9 - 50||-||1413.7)||/||16965|
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.
Constellation Brands Inc has a M-score of -2.41 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
Constellation Brands Inc Annual Data
Constellation Brands Inc Quarterly Data