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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 Valassis Communications Inc 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 Valassis Communications 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 * 1.0878||+||0.528 * 0.9715||+||0.404 * 1.0104||+||0.892 * 0.94||+||0.115 * 0.9712|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0232||+||4.679 * -0.0209||-||0.327 * 0.9646|
|This Year (Sep13) TTM:||Last Year (Sep12) TTM:|
|Accounts Receivable was $408 Mil.|
Revenue was 489.383 + 495.887 + 482.522 + 579.439 = $2,047 Mil.
Gross Profit was 128.046 + 131.344 + 121.754 + 150.205 = $531 Mil.
Total Current Assets was $569 Mil.
Total Assets was $1,529 Mil.
Property, Plant and Equipment(Net PPE) was $110 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $311 Mil.
Total Current Liabilities was $432 Mil.
Long-Term Debt was $503 Mil.
Net Income was 27.713 + 26.786 + 21.669 + 34.117 = $110 Mil.
Non Operating Income was 1.713 + 0.621 + -0.302 + -0.495 = $2 Mil.
Cash Flow from Operations was 22.402 + 59.969 + 23.45 + 34.845 = $141 Mil.
|Accounts Receivable was $399 Mil.
Revenue was 523.822 + 540.238 + 518.585 + 595.337 = $2,178 Mil.
Gross Profit was 135.538 + 136.511 + 129.691 + 147.411 = $549 Mil.
Total Current Assets was $577 Mil.
Total Assets was $1,575 Mil.
Property, Plant and Equipment(Net PPE) was $132 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $324 Mil.
Total Current Liabilities was $426 Mil.
Long-Term Debt was $573 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)|
|=||(408.322 / 2047.231)||/||(399.341 / 2177.982)|
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)|
|=||(131.344 / 2177.982)||/||(128.046 / 2047.231)|
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 - (569.018 + 109.826) / 1528.702)||/||(1 - (576.625 + 131.566) / 1574.565)|
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))|
|=||(58.243 / (58.243 + 131.566))||/||(50.73 / (50.73 + 109.826))|
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)|
|=||(311.391 / 2047.231)||/||(323.78 / 2177.982)|
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)|
|=||((502.65 + 432.32) / 1528.702)||/||((572.561 + 425.783) / 1574.565)|
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|
|=||(110.285 - 1.537||-||140.666)||/||1528.702|
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.
Valassis Communications Inc has a M-score of -2.56 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
Valassis Communications Inc Annual Data
Valassis Communications Inc Quarterly Data