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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 -2.64.
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 * 0.9502||+||0.528 * 0.7884||+||0.404 * 0.9865||+||0.892 * 1.1433||+||0.115 * 1.0161|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9878||+||4.679 * -0.0221||-||0.327 * 0.9536|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $533 Mil.|
Revenue was 956.825 + 754.728 + 857.285 + 1038.46 = $3,607 Mil.
Gross Profit was 292.184 + 164.718 + 253.929 + 291.29 = $1,002 Mil.
Total Current Assets was $1,023 Mil.
Total Assets was $8,290 Mil.
Property, Plant and Equipment(Net PPE) was $3,217 Mil.
Depreciation, Depletion and Amortization(DDA) was $281 Mil.
Selling, General & Admin. Expense(SGA) was $310 Mil.
Total Current Liabilities was $333 Mil.
Long-Term Debt was $1,983 Mil.
Net Income was 123.75 + 18.924 + 88.888 + 123.805 = $355 Mil.
Non Operating Income was 0.029 + -0.694 + 0.599 + -2.818 = $-3 Mil.
Cash Flow from Operations was 59.676 + 42.857 + 222.041 + 216.7 = $541 Mil.
|Accounts Receivable was $490 Mil.
Revenue was 895.143 + 631.293 + 755.027 + 873.579 = $3,155 Mil.
Gross Profit was 234.449 + 77.865 + 169.66 + 209.042 = $691 Mil.
Total Current Assets was $1,022 Mil.
Total Assets was $8,196 Mil.
Property, Plant and Equipment(Net PPE) was $3,116 Mil.
Depreciation, Depletion and Amortization(DDA) was $277 Mil.
Selling, General & Admin. Expense(SGA) was $275 Mil.
Total Current Liabilities was $507 Mil.
Long-Term Debt was $1,894 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)|
|=||(532.795 / 3607.298)||/||(490.411 / 3155.042)|
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)|
|=||(691.016 / 3155.042)||/||(1002.121 / 3607.298)|
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 - (1023.407 + 3217.371) / 8290.113)||/||(1 - (1022.2 + 3115.524) / 8195.883)|
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))|
|=||(276.903 / (276.903 + 3115.524))||/||(281.029 / (281.029 + 3217.371))|
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)|
|=||(310.033 / 3607.298)||/||(274.514 / 3155.042)|
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)|
|=||((1982.527 + 332.678) / 8290.113)||/||((1893.737 + 506.64) / 8195.883)|
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|
|=||(355.367 - -2.884||-||541.274)||/||8290.113|
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 -2.60 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