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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.
Universal Forest Products Inc has a M-score of -2.57 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Universal Forest Products Inc was 0.43. The lowest was -3.61. And the median was -2.48.
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 Universal Forest Products 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 * 0.9069||+||0.528 * 0.9092||+||0.404 * 0.931||+||0.892 * 1.1476||+||0.115 * 1.0267|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9753||+||4.679 * -0.0182||-||0.327 * 0.9439|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $242 Mil.|
Revenue was 553.998 + 525.737 + 651.78 + 738.436 = $2,470 Mil.
Gross Profit was 66.012 + 64.868 + 78.289 + 80.216 = $289 Mil.
Total Current Assets was $582 Mil.
Total Assets was $1,007 Mil.
Property, Plant and Equipment(Net PPE) was $241 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $210 Mil.
Total Current Liabilities was $160 Mil.
Long-Term Debt was $143 Mil.
Net Income was 7.216 + 7.995 + 14.091 + 15.772 = $45 Mil.
Non Operating Income was 0.051 + 0.049 + 0.018 + 0.092 = $0 Mil.
Cash Flow from Operations was -54.732 + 5.623 + 73.248 + 39.064 = $63 Mil.
|Accounts Receivable was $233 Mil.
Revenue was 554.494 + 470.763 + 533.366 + 593.693 = $2,152 Mil.
Gross Profit was 57.818 + 44.141 + 55.227 + 72.075 = $229 Mil.
Total Current Assets was $550 Mil.
Total Assets was $967 Mil.
Property, Plant and Equipment(Net PPE) was $228 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $188 Mil.
Total Current Liabilities was $154 Mil.
Long-Term Debt was $155 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)|
|=||(242.433 / 2469.951)||/||(232.954 / 2152.316)|
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)|
|=||(64.868 / 2152.316)||/||(66.012 / 2469.951)|
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 - (582.352 + 241.419) / 1006.784)||/||(1 - (550.075 + 228.083) / 966.95)|
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))|
|=||(33.2 / (33.2 + 228.083))||/||(34.097 / (34.097 + 241.419))|
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)|
|=||(210.072 / 2469.951)||/||(187.697 / 2152.316)|
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)|
|=||((143.471 + 160.22) / 1006.784)||/||((155.181 + 153.828) / 966.95)|
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|
|=||(45.074 - 0.21||-||63.203)||/||1006.784|
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.
Universal Forest Products 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
Universal Forest Products Inc Annual Data
Universal Forest Products Inc Quarterly Data