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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 VF Corp was -1.13. The lowest was -4.36. And the median was -2.57.
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 VF 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 * 0.949||+||0.528 * 1.0017||+||0.404 * 1.0071||+||0.892 * 1.0057||+||0.115 * 0.9564|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0231||+||4.679 * -0.0336||-||0.327 * 1.1001|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,785 Mil.|
Revenue was 3488.226 + 2445.259 + 2839.3 + 3670.368 = $12,443 Mil.
Gross Profit was 1687.478 + 1176.486 + 1367.294 + 1789.899 = $6,021 Mil.
Total Current Assets was $4,819 Mil.
Total Assets was $10,443 Mil.
Property, Plant and Equipment(Net PPE) was $949 Mil.
Depreciation, Depletion and Amortization(DDA) was $279 Mil.
Selling, General & Admin. Expense(SGA) was $4,283 Mil.
Total Current Liabilities was $2,177 Mil.
Long-Term Debt was $2,347 Mil.
Net Income was 498.489 + 51.015 + 260.269 + 312.209 = $1,122 Mil.
Non Operating Income was -1.097 + 1.501 + 1.29 + 1.438 = $3 Mil.
Cash Flow from Operations was 31.594 + 157.36 + -145.586 + 1426.721 = $1,470 Mil.
|Accounts Receivable was $1,871 Mil.
Revenue was 3529.626 + 2426.986 + 2837.301 + 3578.86 = $12,373 Mil.
Gross Profit was 1685.185 + 1166.048 + 1390.754 + 1755.235 = $5,997 Mil.
Total Current Assets was $4,936 Mil.
Total Assets was $10,652 Mil.
Property, Plant and Equipment(Net PPE) was $982 Mil.
Depreciation, Depletion and Amortization(DDA) was $273 Mil.
Selling, General & Admin. Expense(SGA) was $4,163 Mil.
Total Current Liabilities was $2,784 Mil.
Long-Term Debt was $1,411 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)|
|=||(1785.289 / 12443.153)||/||(1870.53 / 12372.773)|
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)|
|=||(5997.222 / 12372.773)||/||(6021.157 / 12443.153)|
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 - (4819.023 + 949.312) / 10443.109)||/||(1 - (4935.817 + 981.558) / 10651.922)|
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))|
|=||(272.668 / (272.668 + 981.558))||/||(279.262 / (279.262 + 949.312))|
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)|
|=||(4283.387 / 12443.153)||/||(4162.838 / 12372.773)|
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)|
|=||((2347.122 + 2177.196) / 10443.109)||/||((1411.446 + 2783.62) / 10651.922)|
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|
|=||(1121.982 - 3.132||-||1470.089)||/||10443.109|
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.
VF Corp has a M-score of -2.72 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
VF Corp Annual Data
VF Corp Quarterly Data