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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 -1.27. The lowest was -3.44. 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 * 0.8987||+||0.528 * 0.9333||+||0.404 * 0.9792||+||0.892 * 1.1196||+||0.115 * 0.8942|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0565||+||4.679 * -0.0101||-||0.327 * 1.0454|
|This Year (Feb17) TTM:||Last Year (Feb16) TTM:|
|Accounts Receivable was $737 Mil.|
Revenue was 1628 + 1810.5 + 2021.2 + 1871.8 = $7,332 Mil.
Gross Profit was 787.7 + 891.4 + 969 + 881.3 = $3,529 Mil.
Total Current Assets was $3,230 Mil.
Total Assets was $18,602 Mil.
Property, Plant and Equipment(Net PPE) was $3,933 Mil.
Depreciation, Depletion and Amortization(DDA) was $294 Mil.
Selling, General & Admin. Expense(SGA) was $1,392 Mil.
Total Current Liabilities was $2,698 Mil.
Long-Term Debt was $7,721 Mil.
Net Income was 452 + 405.9 + 358.9 + 318.3 = $1,535 Mil.
Non Operating Income was -0.9 + 27.5 + 0 + 0.7 = $27 Mil.
Cash Flow from Operations was 280.3 + 370.8 + 699 + 345.9 = $1,696 Mil.
|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.
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)|
|=||(737 / 7331.5)||/||(732.5 / 6548.4)|
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)|
|=||(2942.3 / 6548.4)||/||(3529.4 / 7331.5)|
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 - (3230 + 3932.8) / 18602.4)||/||(1 - (2977.6 + 3333.4) / 16965)|
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))|
|=||(221 / (221 + 3333.4))||/||(293.9 / (293.9 + 3932.8))|
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)|
|=||(1392.4 / 7331.5)||/||(1177.2 / 6548.4)|
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)|
|=||((7720.7 + 2697.6) / 18602.4)||/||((6816.2 + 2272.3) / 16965)|
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|
|=||(1535.1 - 27.3||-||1696)||/||18602.4|
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 -2.59 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