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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 -1.94. The lowest was -3.08. And the median was -2.70.
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 * 1.0157||+||0.528 * 0.7851||+||0.404 * 1.0435||+||0.892 * 1.0807||+||0.115 * 1.0174|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9712||+||4.679 * -0.0073||-||0.327 * 0.8378|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $355 Mil.|
Revenue was 755.027 + 873.579 + 791.143 + 574.42 = $2,994 Mil.
Gross Profit was 169.66 + 209.042 + 174.788 + 34.092 = $588 Mil.
Total Current Assets was $920 Mil.
Total Assets was $8,062 Mil.
Property, Plant and Equipment(Net PPE) was $3,072 Mil.
Depreciation, Depletion and Amortization(DDA) was $279 Mil.
Selling, General & Admin. Expense(SGA) was $272 Mil.
Total Current Liabilities was $452 Mil.
Long-Term Debt was $1,855 Mil.
Net Income was 38.021 + 66.939 + 45.967 + 53.995 = $205 Mil.
Non Operating Income was -0.923 + -0.593 + 1.798 + 2.825 = $3 Mil.
Cash Flow from Operations was 110.61 + 126.826 + 27.872 + -4.972 = $260 Mil.
|Accounts Receivable was $323 Mil.
Revenue was 680.246 + 813.568 + 738.733 + 538.162 = $2,771 Mil.
Gross Profit was 117.347 + 158.983 + 132.895 + 17.655 = $427 Mil.
Total Current Assets was $951 Mil.
Total Assets was $8,259 Mil.
Property, Plant and Equipment(Net PPE) was $3,312 Mil.
Depreciation, Depletion and Amortization(DDA) was $307 Mil.
Selling, General & Admin. Expense(SGA) was $259 Mil.
Total Current Liabilities was $299 Mil.
Long-Term Debt was $2,522 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)|
|=||(354.935 / 2994.169)||/||(323.369 / 2770.709)|
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)|
|=||(209.042 / 2770.709)||/||(169.66 / 2994.169)|
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 - (920.469 + 3071.63) / 8061.902)||/||(1 - (951.496 + 3312.017) / 8259.143)|
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))|
|=||(307.108 / (307.108 + 3312.017))||/||(279.497 / (279.497 + 3071.63))|
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)|
|=||(272.288 / 2994.169)||/||(259.427 / 2770.709)|
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)|
|=||((1855.447 + 451.878) / 8061.902)||/||((2522.243 + 299.135) / 8259.143)|
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|
|=||(204.922 - 3.107||-||260.336)||/||8061.902|
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 -2.46 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