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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 -3.58. And the median was -2.50.
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 * 1.0035||+||0.528 * 0.9488||+||0.404 * 0.99||+||0.892 * 1.1069||+||0.115 * 1.1591|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9732||+||4.679 * -0.0266||-||0.327 * 0.9953|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (May16) TTM:||Last Year (May15) TTM:|
|Accounts Receivable was $773 Mil.|
Revenue was 1871.8 + 1543.2 + 1640.5 + 1733.4 = $6,789 Mil.
Gross Profit was 881.3 + 696.1 + 733.5 + 775.6 = $3,087 Mil.
Total Current Assets was $3,219 Mil.
Total Assets was $17,630 Mil.
Property, Plant and Equipment(Net PPE) was $3,507 Mil.
Depreciation, Depletion and Amortization(DDA) was $226 Mil.
Selling, General & Admin. Expense(SGA) was $1,196 Mil.
Total Current Liabilities was $2,699 Mil.
Long-Term Debt was $6,691 Mil.
Net Income was 318.3 + 243.4 + 270.5 + 302.4 = $1,135 Mil.
Non Operating Income was 0.7 + 22.6 + 27.3 + -0.9 = $50 Mil.
Cash Flow from Operations was 345.9 + 322.1 + 288.5 + 597.4 = $1,554 Mil.
|Accounts Receivable was $696 Mil.
Revenue was 1631.3 + 1356.2 + 1541.7 + 1604.1 = $6,133 Mil.
Gross Profit was 737.1 + 597.6 + 638.9 + 672 = $2,646 Mil.
Total Current Assets was $2,979 Mil.
Total Assets was $15,247 Mil.
Property, Plant and Equipment(Net PPE) was $2,742 Mil.
Depreciation, Depletion and Amortization(DDA) was $207 Mil.
Selling, General & Admin. Expense(SGA) was $1,110 Mil.
Total Current Liabilities was $1,120 Mil.
Long-Term Debt was $7,038 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)|
|=||(773.3 / 6788.9)||/||(696.2 / 6133.3)|
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)|
|=||(2645.6 / 6133.3)||/||(3086.5 / 6788.9)|
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 - (3218.5 + 3507.2) / 17630)||/||(1 - (2979.3 + 2742.1) / 15247.3)|
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))|
|=||(207.2 / (207.2 + 2742.1))||/||(226.3 / (226.3 + 3507.2))|
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)|
|=||(1196 / 6788.9)||/||(1110.3 / 6133.3)|
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)|
|=||((6690.6 + 2698.7) / 17630)||/||((7038.2 + 1120.3) / 15247.3)|
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|
|=||(1134.6 - 49.7||-||1553.9)||/||17630|
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 -2.51 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