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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 Thomson Reuters Corp was 0.00. The lowest was 0.00. And the median was 0.00.
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 Thomson Reuters Corp 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,468 Mil.|
Revenue was 2793 + 3148 + 2979 + 3038 = $11,958 Mil.
Gross Profit was 684 + 900 + 846 + 797 = $3,227 Mil.
Total Current Assets was $4,841 Mil.
Total Assets was $29,048 Mil.
Property, Plant and Equipment(Net PPE) was $1,019 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,621 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $6,221 Mil.
Long-Term Debt was $6,379 Mil.
Net Income was 262 + 408 + 280 + 262 = $1,212 Mil.
Non Operating Income was -34 + 16 + -14 + -5 = $-37 Mil.
Cash Flow from Operations was 458 + 1005 + 665 + 931 = $3,059 Mil.
|Accounts Receivable was $1,777 Mil.
Revenue was 2821 + 3211 + 3107 + 3159 = $12,298 Mil.
Gross Profit was 787 + 828 + 909 + 844 = $3,368 Mil.
Total Current Assets was $3,516 Mil.
Total Assets was $29,789 Mil.
Property, Plant and Equipment(Net PPE) was $1,113 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,780 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $4,594 Mil.
Long-Term Debt was $7,446 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)|
|=||(1468 / 11958)||/||(1777 / 12298)|
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)|
|=||(3368 / 12298)||/||(3227 / 11958)|
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 - (4841 + 1019) / 29048)||/||(1 - (3516 + 1113) / 29789)|
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))|
|=||(1780 / (1780 + 1113))||/||(1621 / (1621 + 1019))|
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)|
|=||(0 / 11958)||/||(0 / 12298)|
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)|
|=||((6379 + 6221) / 29048)||/||((7446 + 4594) / 29789)|
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|
|=||(1212 - -37||-||3059)||/||29048|
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.
Thomson Reuters Corp has a M-score of 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
Thomson Reuters Corp Annual Data
Thomson Reuters Corp Quarterly Data