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GuruFocus has detected 2 Warning Signs with Vulcan Materials Co $VMC.
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Vulcan Materials Co (NYSE:VMC)
Beneish M-Score
-2.50 (As of Today)

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.

Vulcan Materials Co has a M-score of -2.50 suggests that the company is not a manipulator.

VMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -1.94
Current: -2.5

-3.08
-1.94

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 -2.72.


Definition

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 * 1.1377+0.528 * 0.8995+0.404 * 0.9829+0.892 * 1.0498+0.115 * 0.9969
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.046+4.679 * -0.0267-0.327 * 0.9888
=-2.50

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $474 Mil.
Revenue was 872.974 + 1008.14 + 956.825 + 754.728 = $3,593 Mil.
Gross Profit was 239.705 + 304.209 + 292.184 + 164.718 = $1,001 Mil.
Total Current Assets was $1,137 Mil.
Total Assets was $8,471 Mil.
Property, Plant and Equipment(Net PPE) was $3,261 Mil.
Depreciation, Depletion and Amortization(DDA) was $285 Mil.
Selling, General & Admin. Expense(SGA) was $315 Mil.
Total Current Liabilities was $372 Mil.
Long-Term Debt was $1,983 Mil.
Net Income was 137.052 + 139.765 + 123.75 + 18.924 = $419 Mil.
Non Operating Income was 0.619 + 0.99 + 0.029 + -0.694 = $1 Mil.
Cash Flow from Operations was 299.14 + 242.915 + 59.676 + 42.857 = $645 Mil.
Accounts Receivable was $397 Mil.
Revenue was 857.285 + 1038.46 + 895.143 + 631.293 = $3,422 Mil.
Gross Profit was 253.929 + 291.29 + 234.449 + 77.865 = $858 Mil.
Total Current Assets was $1,085 Mil.
Total Assets was $8,302 Mil.
Property, Plant and Equipment(Net PPE) was $3,156 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $287 Mil.
Total Current Liabilities was $353 Mil.
Long-Term Debt was $1,980 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(474.496 / 3592.667) / (397.287 / 3422.181)
=0.13207347 / 0.11609176
=1.1377

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(857.533 / 3422.181) / (1000.816 / 3592.667)
=0.25058084 / 0.27857188
=0.8995

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1137.182 + 3261.438) / 8471.475) / (1 - (1084.591 + 3156.29) / 8301.632)
=0.48077283 / 0.48915093
=0.9829

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3592.667 / 3422.181
=1.0498

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))
=(274.823 / (274.823 + 3156.29)) / (284.94 / (284.94 + 3261.438))
=0.08009733 / 0.08034677
=0.9969

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)
=(314.986 / 3592.667) / (286.844 / 3422.181)
=0.0876747 / 0.08381906
=1.046

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)
=((1982.751 + 372.244) / 8471.475) / ((1980.334 + 353.479) / 8301.632)
=0.27799114 / 0.28112701
=0.9888

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(419.491 - 0.944 - 644.588) / 8471.475
=-0.0267

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 -2.50 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Vulcan Materials Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.08240.70471.11511.24670.93930.92671.13391.01860.92981.1377
GMI 0.97571.39171.23871.41041.06170.85080.84450.78510.78310.8995
AQI 1.92780.93181.05961.02631.01731.02150.98721.04080.97140.9829
SGI 0.99561.09730.73680.95111.00221.00111.07921.08071.14291.0498
DEPI 1.54860.81490.92610.97170.9941.00641.12051.01741.04130.9969
SGAI 1.10071.07811.27411.07080.89020.88580.92760.97120.92171.046
LVGI 1.92270.94260.81471.0351.03930.97190.9370.83240.98870.9888
TATA -0.0282-0.0482-0.0502-0.0362-0.0291-0.0366-0.0411-0.0074-0.0357-0.0267
M-score -2.43-2.73-2.69-2.27-2.63-2.76-2.52-2.46-2.69-2.50

Vulcan Materials Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.99611.01860.97711.02331.01360.92981.03220.95020.89291.1377
GMI 0.78560.78510.76320.77480.78720.78310.77690.78840.82080.8995
AQI 1.04321.04080.9751.00250.9720.97141.00810.98650.99490.9829
SGI 1.08171.08071.0871.10341.13721.14291.16211.14331.07741.0498
DEPI 1.0331.01741.14361.1211.04791.04131.03161.01611.00510.9969
SGAI 0.79810.97120.96250.94380.93270.92170.9350.98781.04461.046
LVGI 0.83930.83241.04370.99320.98790.98870.91080.95360.97550.9888
TATA -0.0095-0.0074-0.021-0.023-0.0263-0.0357-0.0315-0.024-0.0255-0.0267
M-score -2.46-2.46-2.65-2.57-2.57-2.69-2.52-2.61-2.72-2.50
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