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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.
Wal-Mart Stores Inc has a M-score of -2.68 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Wal-Mart Stores Inc was -2.07. The lowest was -3.09. 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 Wal-Mart Stores Inc 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 * 0.9707||+||0.528 * 1.0002||+||0.404 * 0.9611||+||0.892 * 1.0163||+||0.115 * 0.9682|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0142||+||4.679 * -0.0353||-||0.327 * 0.9978|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $6,677 Mil.|
Revenue was 129706 + 115688 + 116945 + 114187 = $476,526 Mil.
Gross Profit was 31735 + 29001 + 29490 + 28160 = $118,386 Mil.
Total Current Assets was $61,185 Mil.
Total Assets was $204,751 Mil.
Property, Plant and Equipment(Net PPE) was $117,907 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,870 Mil.
Selling, General & Admin. Expense(SGA) was $91,480 Mil.
Total Current Liabilities was $69,345 Mil.
Long-Term Debt was $44,559 Mil.
Net Income was 4431 + 3738 + 4069 + 3784 = $16,022 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 9937 + 2069 + 6357 + 4894 = $23,257 Mil.
|Accounts Receivable was $6,768 Mil.
Revenue was 127776 + 113800 + 114282 + 113010 = $468,868 Mil.
Gross Profit was 31705 + 28330 + 28639 + 27832 = $116,506 Mil.
Total Current Assets was $59,940 Mil.
Total Assets was $203,105 Mil.
Property, Plant and Equipment(Net PPE) was $116,681 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,478 Mil.
Selling, General & Admin. Expense(SGA) was $88,748 Mil.
Total Current Liabilities was $71,818 Mil.
Long-Term Debt was $41,417 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)|
|=||(6677 / 476526)||/||(6768 / 468868)|
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)|
|=||(29001 / 468868)||/||(31735 / 476526)|
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 - (61185 + 117907) / 204751)||/||(1 - (59940 + 116681) / 203105)|
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))|
|=||(8478 / (8478 + 116681))||/||(8870 / (8870 + 117907))|
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)|
|=||(91480 / 476526)||/||(88748 / 468868)|
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)|
|=||((44559 + 69345) / 204751)||/||((41417 + 71818) / 203105)|
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|
|=||(16022 - 0||-||23257)||/||204751|
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.
Wal-Mart Stores Inc has a M-score of -2.68 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
Wal-Mart Stores Inc Annual Data
Wal-Mart Stores Inc Quarterly Data