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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 -1.45 signals that the company is 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 -2.44.
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 * 0.7112||+||0.528 * 0.9343||+||0.404 * 1.1013||+||0.892 * 2.018||+||0.115 * 1.1529|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7801||+||4.679 * 0.0687||-||0.327 * 0.9755|
|This Year (May14) TTM:||Last Year (May13) TTM:|
|Accounts Receivable was $651 Mil.|
Revenue was 1526 + 1291.2 + 1443.3 + 1459.8 = $5,720 Mil.
Gross Profit was 670.1 + 548.9 + 609.7 + 577 = $2,406 Mil.
Total Current Assets was $3,137 Mil.
Total Assets was $14,842 Mil.
Property, Plant and Equipment(Net PPE) was $2,157 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $987 Mil.
Total Current Liabilities was $2,255 Mil.
Long-Term Debt was $6,346 Mil.
Net Income was 206.7 + 157.2 + 211 + 1522 = $2,097 Mil.
Non Operating Income was 0.5 + -0.5 + 18 + 3.7 = $22 Mil.
Cash Flow from Operations was 232.3 + 197.1 + 140.1 + 485.7 = $1,055 Mil.
|Accounts Receivable was $454 Mil.
Revenue was 673.4 + 695.9 + 766.9 + 698.5 = $2,835 Mil.
Gross Profit was 256.1 + 261.8 + 310.8 + 285.1 = $1,114 Mil.
Total Current Assets was $2,723 Mil.
Total Assets was $9,452 Mil.
Property, Plant and Equipment(Net PPE) was $1,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $627 Mil.
Total Current Liabilities was $797 Mil.
Long-Term Debt was $4,818 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)|
|=||(651.3 / 5720.3)||/||(453.8 / 2834.7)|
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)|
|=||(548.9 / 2834.7)||/||(670.1 / 5720.3)|
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 - (3137.2 + 2157.1) / 14842.4)||/||(1 - (2723.3 + 1207.6) / 9452.4)|
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))|
|=||(114.9 / (114.9 + 1207.6))||/||(175.8 / (175.8 + 2157.1))|
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)|
|=||(987.4 / 5720.3)||/||(627.2 / 2834.7)|
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)|
|=||((6345.6 + 2254.7) / 14842.4)||/||((4817.7 + 797.2) / 9452.4)|
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|
|=||(2096.9 - 21.7||-||1055.2)||/||14842.4|
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 -1.45 signals that the company is likely to 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