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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 -2.57.
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 * 0.9625||+||0.528 * 0.9933||+||0.404 * 0.8856||+||0.892 * 1.0578||+||0.115 * 1.0202|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0045||+||4.679 * -0.0139||-||0.327 * 1.2105|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,200 Mil.|
Revenue was 2513.86 + 2837.301 + 3578.86 + 3520.447 = $12,450 Mil.
Gross Profit was 1213.514 + 1390.754 + 1755.235 + 1701.792 = $6,061 Mil.
Total Current Assets was $4,206 Mil.
Total Assets was $9,906 Mil.
Property, Plant and Equipment(Net PPE) was $964 Mil.
Depreciation, Depletion and Amortization(DDA) was $273 Mil.
Selling, General & Admin. Expense(SGA) was $4,229 Mil.
Total Current Liabilities was $2,456 Mil.
Long-Term Debt was $1,412 Mil.
Net Income was 170.811 + 288.709 + 122.101 + 470.529 = $1,052 Mil.
Non Operating Income was 0.67 + 0.828 + -1.335 + -1.609 = $-1 Mil.
Cash Flow from Operations was 144.178 + -430.624 + 1330.783 + 147.259 = $1,192 Mil.
|Accounts Receivable was $1,179 Mil.
Revenue was 2402.076 + 2780.778 + 3290.099 + 3297.269 = $11,770 Mil.
Gross Profit was 1162.732 + 1374.212 + 1585.409 + 1569.125 = $5,691 Mil.
Total Current Assets was $3,780 Mil.
Total Assets was $10,215 Mil.
Property, Plant and Equipment(Net PPE) was $922 Mil.
Depreciation, Depletion and Amortization(DDA) was $268 Mil.
Selling, General & Admin. Expense(SGA) was $3,980 Mil.
Total Current Liabilities was $1,870 Mil.
Long-Term Debt was $1,425 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)|
|=||(1200.241 / 12450.468)||/||(1178.874 / 11770.222)|
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)|
|=||(1390.754 / 11770.222)||/||(1213.514 / 12450.468)|
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 - (4206.49 + 964.373) / 9905.504)||/||(1 - (3779.912 + 921.97) / 10215.327)|
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))|
|=||(267.759 / (267.759 + 921.97))||/||(272.947 / (272.947 + 964.373))|
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)|
|=||(4229.345 / 12450.468)||/||(3980.395 / 11770.222)|
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)|
|=||((1412.244 + 2455.83) / 9905.504)||/||((1425.123 + 1870.324) / 10215.327)|
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|
|=||(1052.15 - -1.446||-||1191.596)||/||9905.504|
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 -2.65 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