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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 -1.60. The lowest was -3.35. And the median was -2.45.
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 * 0.7723||+||0.528 * 0.9565||+||0.404 * 0.9455||+||0.892 * 1.2384||+||0.115 * 1.0218|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9729||+||4.679 * -0.0171||-||0.327 * 0.9297|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Feb15) TTM:||Last Year (Feb14) TTM:|
|Accounts Receivable was $599 Mil.|
Revenue was 1356.2 + 1541.7 + 1604.1 + 1526 = $6,028 Mil.
Gross Profit was 597.6 + 638.9 + 672 + 670.1 = $2,579 Mil.
Total Current Assets was $2,911 Mil.
Total Assets was $15,145 Mil.
Property, Plant and Equipment(Net PPE) was $2,682 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,078 Mil.
Total Current Liabilities was $1,131 Mil.
Long-Term Debt was $7,138 Mil.
Net Income was 214.6 + 222.2 + 195.8 + 206.7 = $839 Mil.
Non Operating Income was 0.4 + 21.2 + -5 + 0.5 = $17 Mil.
Cash Flow from Operations was 330.9 + 82 + 435.8 + 232.3 = $1,081 Mil.
|Accounts Receivable was $626 Mil.
Revenue was 1291.2 + 1443.3 + 1459.8 + 673.4 = $4,868 Mil.
Gross Profit was 548.9 + 609.7 + 577 + 256.1 = $1,992 Mil.
Total Current Assets was $2,747 Mil.
Total Assets was $14,302 Mil.
Property, Plant and Equipment(Net PPE) was $2,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $895 Mil.
Total Current Liabilities was $2,026 Mil.
Long-Term Debt was $6,373 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)|
|=||(598.9 / 6028)||/||(626.2 / 4867.7)|
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)|
|=||(638.9 / 4867.7)||/||(597.6 / 6028)|
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 - (2910.8 + 2681.6) / 15144.5)||/||(1 - (2747.2 + 2014.3) / 14302.1)|
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))|
|=||(155.3 / (155.3 + 2014.3))||/||(202 / (202 + 2681.6))|
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)|
|=||(1078.4 / 6028)||/||(895.1 / 4867.7)|
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)|
|=||((7137.5 + 1130.7) / 15144.5)||/||((6373.3 + 2025.7) / 14302.1)|
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|
|=||(839.3 - 17.1||-||1081)||/||15144.5|
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 -2.57 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