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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 -1.45. The lowest was -3.35. And the median was -2.44.
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 * 0.7513||+||0.528 * 0.9404||+||0.404 * 0.9505||+||0.892 * 1.3957||+||0.115 * 0.93|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9323||+||4.679 * -0.0121||-||0.327 * 0.9214|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $701 Mil.|
Revenue was 1541.7 + 1604.1 + 1526 + 1291.2 = $5,963 Mil.
Gross Profit was 638.9 + 672 + 670.1 + 548.9 = $2,530 Mil.
Total Current Assets was $3,031 Mil.
Total Assets was $14,981 Mil.
Property, Plant and Equipment(Net PPE) was $2,419 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,054 Mil.
Total Current Liabilities was $1,249 Mil.
Long-Term Debt was $7,082 Mil.
Net Income was 222.2 + 195.8 + 206.7 + 157.2 = $782 Mil.
Non Operating Income was 21.2 + -5 + 0.5 + -0.5 = $16 Mil.
Cash Flow from Operations was 82 + 435.8 + 232.3 + 197.1 = $947 Mil.
|Accounts Receivable was $669 Mil.
Revenue was 1443.3 + 1459.8 + 673.4 + 695.9 = $4,272 Mil.
Gross Profit was 609.7 + 577 + 256.1 + 261.8 = $1,705 Mil.
Total Current Assets was $2,835 Mil.
Total Assets was $14,336 Mil.
Property, Plant and Equipment(Net PPE) was $1,905 Mil.
Depreciation, Depletion and Amortization(DDA) was $143 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,755 Mil.
Long-Term Debt was $6,897 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)|
|=||(701.3 / 5963)||/||(668.8 / 4272.4)|
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)|
|=||(672 / 4272.4)||/||(638.9 / 5963)|
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 - (3030.8 + 2419.1) / 14980.5)||/||(1 - (2835.4 + 1905.4) / 14336.3)|
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))|
|=||(143.2 / (143.2 + 1905.4))||/||(196.6 / (196.6 + 2419.1))|
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)|
|=||(1054 / 5963)||/||(810 / 4272.4)|
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)|
|=||((7081.5 + 1248.5) / 14980.5)||/||((6897 + 1755) / 14336.3)|
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|
|=||(781.9 - 16.2||-||947.2)||/||14980.5|
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 -2.43 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