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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.
Constellation Brands Inc has a M-score of -2.38 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Constellation Brands Inc was -1.45. The lowest was -3.36. 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 * 0.6141||+||0.528 * 0.9167||+||0.404 * 0.9572||+||0.892 * 1.6309||+||0.115 * 0.8601|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8865||+||4.679 * -0.0169||-||0.327 * 0.9057|
|This Year (Aug14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $657 Mil.|
Revenue was 1604.1 + 1526 + 1291.2 + 1443.3 = $5,865 Mil.
Gross Profit was 672 + 670.1 + 548.9 + 609.7 = $2,501 Mil.
Total Current Assets was $2,838 Mil.
Total Assets was $14,657 Mil.
Property, Plant and Equipment(Net PPE) was $2,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $1,037 Mil.
Total Current Liabilities was $1,876 Mil.
Long-Term Debt was $6,323 Mil.
Net Income was 195.8 + 206.7 + 157.2 + 211 = $771 Mil.
Non Operating Income was -5 + 0.5 + -0.5 + 18 = $13 Mil.
Cash Flow from Operations was 435.8 + 232.3 + 197.1 + 140.1 = $1,005 Mil.
|Accounts Receivable was $656 Mil.
Revenue was 1459.8 + 673.4 + 695.9 + 766.9 = $3,596 Mil.
Gross Profit was 577 + 256.1 + 261.8 + 310.8 = $1,406 Mil.
Total Current Assets was $2,670 Mil.
Total Assets was $14,123 Mil.
Property, Plant and Equipment(Net PPE) was $1,870 Mil.
Depreciation, Depletion and Amortization(DDA) was $129 Mil.
Selling, General & Admin. Expense(SGA) was $717 Mil.
Total Current Liabilities was $1,811 Mil.
Long-Term Debt was $6,913 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)|
|=||(656.9 / 5864.6)||/||(655.9 / 3596)|
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)|
|=||(670.1 / 3596)||/||(672 / 5864.6)|
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 - (2838.1 + 2299.9) / 14657.4)||/||(1 - (2670.1 + 1870.4) / 14122.8)|
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))|
|=||(129.4 / (129.4 + 1870.4))||/||(187.1 / (187.1 + 2299.9))|
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)|
|=||(1036.6 / 5864.6)||/||(717 / 3596)|
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)|
|=||((6323.2 + 1876.3) / 14657.4)||/||((6912.7 + 1810.6) / 14122.8)|
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|
|=||(770.7 - 13||-||1005.3)||/||14657.4|
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 -2.38 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