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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 -1.08. The lowest was -4.23. And the median was -2.56.
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 * 0.9197||+||0.528 * 0.993||+||0.404 * 0.8795||+||0.892 * 1.0647||+||0.115 * 0.9426|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0037||+||4.679 * -0.0218||-||0.327 * 1.2796|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,283 Mil.|
Revenue was 2837.301 + 3578.86 + 3520.447 + 2402.076 = $12,339 Mil.
Gross Profit was 1390.754 + 1755.235 + 1701.792 + 1162.732 = $6,011 Mil.
Total Current Assets was $4,082 Mil.
Total Assets was $9,733 Mil.
Property, Plant and Equipment(Net PPE) was $911 Mil.
Depreciation, Depletion and Amortization(DDA) was $277 Mil.
Selling, General & Admin. Expense(SGA) was $4,182 Mil.
Total Current Liabilities was $2,278 Mil.
Long-Term Debt was $1,423 Mil.
Net Income was 288.709 + 122.101 + 470.529 + 157.682 = $1,039 Mil.
Non Operating Income was 0.828 + -1.335 + -1.609 + -0.508 = $-3 Mil.
Cash Flow from Operations was -430.624 + 1330.783 + 147.259 + 205.933 = $1,253 Mil.
|Accounts Receivable was $1,310 Mil.
Revenue was 2780.778 + 3290.099 + 3297.269 + 2220.411 = $11,589 Mil.
Gross Profit was 1374.212 + 1585.409 + 1569.125 + 1077.053 = $5,606 Mil.
Total Current Assets was $3,535 Mil.
Total Assets was $9,985 Mil.
Property, Plant and Equipment(Net PPE) was $922 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $3,913 Mil.
Total Current Liabilities was $1,542 Mil.
Long-Term Debt was $1,426 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)|
|=||(1283.216 / 12338.684)||/||(1310.468 / 11588.557)|
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)|
|=||(1755.235 / 11588.557)||/||(1390.754 / 12338.684)|
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 - (4081.526 + 911.478) / 9732.864)||/||(1 - (3534.521 + 921.97) / 9985.152)|
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))|
|=||(259.342 / (259.342 + 921.97))||/||(276.746 / (276.746 + 911.478))|
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)|
|=||(4181.782 / 12338.684)||/||(3913.19 / 11588.557)|
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)|
|=||((1422.84 + 2278.326) / 9732.864)||/||((1425.833 + 1541.533) / 9985.152)|
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|
|=||(1039.021 - -2.624||-||1253.351)||/||9732.864|
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 -2.75 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