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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 Vulcan Materials Co was -1.81. The lowest was -3.12. And the median was -2.66.
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 Vulcan Materials Co 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 * 1.0322||+||0.528 * 0.7769||+||0.404 * 1.0081||+||0.892 * 1.1621||+||0.115 * 1.0316|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.935||+||4.679 * -0.0296||-||0.327 * 0.9108|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $444 Mil.|
Revenue was 754.728 + 857.285 + 1038.46 + 895.143 = $3,546 Mil.
Gross Profit was 164.718 + 253.929 + 291.29 + 234.449 = $944 Mil.
Total Current Assets was $1,008 Mil.
Total Assets was $8,247 Mil.
Property, Plant and Equipment(Net PPE) was $3,198 Mil.
Depreciation, Depletion and Amortization(DDA) was $278 Mil.
Selling, General & Admin. Expense(SGA) was $297 Mil.
Total Current Liabilities was $356 Mil.
Long-Term Debt was $1,981 Mil.
Net Income was 18.924 + 88.888 + 123.805 + 48.162 = $280 Mil.
Non Operating Income was -0.694 + 0.599 + -2.818 + -0.439 = $-3 Mil.
Cash Flow from Operations was 42.857 + 222.041 + 216.7 + 45.483 = $527 Mil.
|Accounts Receivable was $370 Mil.
Revenue was 631.293 + 755.027 + 873.579 + 791.143 = $3,051 Mil.
Gross Profit was 77.865 + 169.66 + 209.042 + 174.788 = $631 Mil.
Total Current Assets was $1,195 Mil.
Total Assets was $8,327 Mil.
Property, Plant and Equipment(Net PPE) was $3,084 Mil.
Depreciation, Depletion and Amortization(DDA) was $277 Mil.
Selling, General & Admin. Expense(SGA) was $273 Mil.
Total Current Liabilities was $703 Mil.
Long-Term Debt was $1,888 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)|
|=||(443.763 / 3545.616)||/||(369.952 / 3051.042)|
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)|
|=||(631.355 / 3051.042)||/||(944.386 / 3545.616)|
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 - (1007.503 + 3197.827) / 8247.025)||/||(1 - (1194.665 + 3084.093) / 8326.525)|
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))|
|=||(276.842 / (276.842 + 3084.093))||/||(277.506 / (277.506 + 3197.827))|
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)|
|=||(296.549 / 3545.616)||/||(272.932 / 3051.042)|
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)|
|=||((1981.425 + 356.485) / 8247.025)||/||((1888.365 + 703.336) / 8326.525)|
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|
|=||(279.779 - -3.352||-||527.081)||/||8247.025|
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.
Vulcan Materials Co has a M-score of -2.51 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
Vulcan Materials Co Annual Data
Vulcan Materials Co Quarterly Data