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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 -1.59 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Safeway Inc. was -1.59. The lowest was -3.92. And the median was -2.71.
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 * 1.3306||+||0.528 * 0.9991||+||0.404 * 0.8201||+||0.892 * 1.0016||+||0.115 * 0.8551|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0097||+||4.679 * 0.133||-||0.327 * 0.8403|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $1,211 Mil.|
Revenue was 10314.3 + 8622 + 8696.1 + 9994 = $37,626 Mil.
Gross Profit was 2730.4 + 2225.3 + 2281.3 + 2668.5 = $9,906 Mil.
Total Current Assets was $8,464 Mil.
Total Assets was $17,220 Mil.
Property, Plant and Equipment(Net PPE) was $7,538 Mil.
Depreciation, Depletion and Amortization(DDA) was $944 Mil.
Selling, General & Admin. Expense(SGA) was $9,196 Mil.
Total Current Liabilities was $5,856 Mil.
Long-Term Debt was $3,891 Mil.
Net Income was 3314.4 + 65.8 + 8.4 + 118.9 = $3,508 Mil.
Non Operating Income was -54.8 + 5.3 + 16.8 + 6.6 = $-26 Mil.
Cash Flow from Operations was 934.8 + 331.5 + 533 + -555.2 = $1,244 Mil.
|Accounts Receivable was $909 Mil.
Revenue was 10204.7 + 8525.8 + 8833.9 + 10003 = $37,567 Mil.
Gross Profit was 2672.7 + 2231.2 + 2291.6 + 2685.2 = $9,881 Mil.
Total Current Assets was $4,168 Mil.
Total Assets was $14,657 Mil.
Property, Plant and Equipment(Net PPE) was $9,225 Mil.
Depreciation, Depletion and Amortization(DDA) was $970 Mil.
Selling, General & Admin. Expense(SGA) was $9,094 Mil.
Total Current Liabilities was $4,630 Mil.
Long-Term Debt was $5,244 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)|
|=||(1211.4 / 37626.4)||/||(909 / 37567.4)|
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)|
|=||(2225.3 / 37567.4)||/||(2730.4 / 37626.4)|
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 - (8463.7 + 7537.5) / 17219.5)||/||(1 - (4167.9 + 9224.6) / 14657)|
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))|
|=||(970.2 / (970.2 + 9224.6))||/||(943.9 / (943.9 + 7537.5))|
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)|
|=||(9196.4 / 37626.4)||/||(9093.5 / 37567.4)|
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)|
|=||((3890.8 + 5856.4) / 17219.5)||/||((5243.5 + 4629.8) / 14657)|
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|
|=||(3507.5 - -26.1||-||1244.1)||/||17219.5|
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.
Safeway Inc. has a M-score of -1.59 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