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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 -1.16. The lowest was -3.73. And the median was -2.55.
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 * 0.9277||+||0.528 * 0.9951||+||0.404 * 0.9844||+||0.892 * 0.9978||+||0.115 * 0.9692|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0584||+||4.679 * -0.0417||-||0.327 * 1.1322|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,127 Mil.|
Revenue was 3320.574 + 3488.226 + 2445.259 + 2839.3 = $12,093 Mil.
Gross Profit was 1630.169 + 1687.478 + 1176.486 + 1367.294 = $5,861 Mil.
Total Current Assets was $4,293 Mil.
Total Assets was $9,739 Mil.
Property, Plant and Equipment(Net PPE) was $940 Mil.
Depreciation, Depletion and Amortization(DDA) was $282 Mil.
Selling, General & Admin. Expense(SGA) was $4,279 Mil.
Total Current Liabilities was $1,785 Mil.
Long-Term Debt was $2,039 Mil.
Net Income was 264.333 + 498.489 + 51.015 + 260.269 = $1,074 Mil.
Non Operating Income was 0.305 + -1.097 + 1.501 + 1.29 = $2 Mil.
Cash Flow from Operations was 1434.551 + 31.594 + 157.36 + -145.586 = $1,478 Mil.
|Accounts Receivable was $1,217 Mil.
Revenue was 3326.279 + 3529.626 + 2426.986 + 2837.301 = $12,120 Mil.
Gross Profit was 1603.911 + 1685.185 + 1166.048 + 1390.754 = $5,846 Mil.
Total Current Assets was $4,163 Mil.
Total Assets was $9,640 Mil.
Property, Plant and Equipment(Net PPE) was $945 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $4,051 Mil.
Total Current Liabilities was $1,942 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)|
|=||(1126.811 / 12093.359)||/||(1217.379 / 12120.192)|
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)|
|=||(5845.898 / 12120.192)||/||(5861.427 / 12093.359)|
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 - (4293.098 + 939.65) / 9739.287)||/||(1 - (4163.136 + 945.491) / 9639.542)|
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))|
|=||(272.075 / (272.075 + 945.491))||/||(281.577 / (281.577 + 939.65))|
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)|
|=||(4278.558 / 12093.359)||/||(4051.485 / 12120.192)|
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)|
|=||((2039.18 + 1785.4) / 9739.287)||/||((1401.82 + 1941.713) / 9639.542)|
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|
|=||(1074.106 - 1.999||-||1477.919)||/||9739.287|
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 -2.81 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