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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 * 1.0001||+||0.528 * 1.011||+||0.404 * 0.9805||+||0.892 * 0.9957||+||0.115 * 1.0013|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0056||+||4.679 * -0.0342||-||0.327 * 1.0657|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,165 Mil.|
Revenue was 2445.259 + 2839.3 + 3412.763 + 3612.82 = $12,310 Mil.
Gross Profit was 1176.486 + 1367.294 + 1649.466 + 1729.21 = $5,922 Mil.
Total Current Assets was $4,068 Mil.
Total Assets was $9,674 Mil.
Property, Plant and Equipment(Net PPE) was $942 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $4,191 Mil.
Total Current Liabilities was $2,661 Mil.
Long-Term Debt was $1,401 Mil.
Net Income was 51.015 + 260.269 + 312.209 + 459.864 = $1,083 Mil.
Non Operating Income was 1.501 + 1.29 + 1.437 + -1.28 = $3 Mil.
Cash Flow from Operations was 157.36 + -145.586 + 1477.471 + -78.243 = $1,411 Mil.
|Accounts Receivable was $1,170 Mil.
Revenue was 2426.986 + 2837.301 + 3578.86 + 3520.447 = $12,364 Mil.
Gross Profit was 1166.048 + 1390.754 + 1755.235 + 1701.792 = $6,014 Mil.
Total Current Assets was $4,054 Mil.
Total Assets was $9,777 Mil.
Property, Plant and Equipment(Net PPE) was $916 Mil.
Depreciation, Depletion and Amortization(DDA) was $273 Mil.
Selling, General & Admin. Expense(SGA) was $4,186 Mil.
Total Current Liabilities was $2,450 Mil.
Long-Term Debt was $1,402 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)|
|=||(1165.2 / 12310.142)||/||(1170.15 / 12363.594)|
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)|
|=||(6013.829 / 12363.594)||/||(5922.456 / 12310.142)|
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 - (4068.016 + 942.044) / 9674.108)||/||(1 - (4053.703 + 915.841) / 9776.915)|
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))|
|=||(272.947 / (272.947 + 915.841))||/||(280.282 / (280.282 + 942.044))|
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)|
|=||(4191.084 / 12310.142)||/||(4185.926 / 12363.594)|
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)|
|=||((1400.636 + 2660.633) / 9674.108)||/||((1401.553 + 2449.738) / 9776.915)|
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|
|=||(1083.357 - 2.948||-||1411.002)||/||9674.108|
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 -2.67 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