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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.
Safeway Inc has a M-score of -1.56 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Safeway Inc was -1.20. The lowest was -4.36. And the median was -2.70.
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 Safeway 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 * 0.6099||+||0.528 * 1.0146||+||0.404 * 1.0352||+||0.892 * 0.8844||+||0.115 * 1.0297|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0127||+||4.679 * 0.2706||-||0.327 * 0.7109|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $330 Mil.|
Revenue was 8307.2 + 8260.9 + 10314.3 + 8622 = $35,504 Mil.
Gross Profit was 2139.5 + 2160.2 + 2730.4 + 2225.3 = $9,255 Mil.
Total Current Assets was $5,358 Mil.
Total Assets was $13,709 Mil.
Property, Plant and Equipment(Net PPE) was $7,355 Mil.
Depreciation, Depletion and Amortization(DDA) was $930 Mil.
Selling, General & Admin. Expense(SGA) was $8,685 Mil.
Total Current Liabilities was $3,019 Mil.
Long-Term Debt was $3,500 Mil.
Net Income was 95.6 + -97.6 + 3314.4 + 65.8 = $3,378 Mil.
Non Operating Income was 53.6 + -139.3 + -54.8 + 5.3 = $-135 Mil.
Cash Flow from Operations was 523.6 + -1986.6 + 934.8 + 331.5 = $-197 Mil.
|Accounts Receivable was $612 Mil.
Revenue was 8149.8 + 8176.9 + 13767.5 + 10049.1 = $40,143 Mil.
Gross Profit was 2145.8 + 2166.3 + 3648.9 + 2656.9 = $10,618 Mil.
Total Current Assets was $5,672 Mil.
Total Assets was $14,555 Mil.
Property, Plant and Equipment(Net PPE) was $7,861 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,028 Mil.
Selling, General & Admin. Expense(SGA) was $9,697 Mil.
Total Current Liabilities was $5,131 Mil.
Long-Term Debt was $4,606 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)|
|=||(330.3 / 35504.4)||/||(612.3 / 40143.3)|
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)|
|=||(2160.2 / 40143.3)||/||(2139.5 / 35504.4)|
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 - (5358.3 + 7354.8) / 13708.6)||/||(1 - (5672.3 + 7861.4) / 14554.7)|
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))|
|=||(1027.6 / (1027.6 + 7861.4))||/||(930.1 / (930.1 + 7354.8))|
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)|
|=||(8685.3 / 35504.4)||/||(9696.8 / 40143.3)|
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)|
|=||((3500.4 + 3019) / 13708.6)||/||((4605.6 + 5131.4) / 14554.7)|
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|
|=||(3378.2 - -135.2||-||-196.7)||/||13708.6|
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.
Safeway Inc has a M-score of -1.56 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
Safeway Inc Annual Data
Safeway Inc Quarterly Data