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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 -2.63 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Wal-Mart Stores Inc was -1.84. The lowest was -3.32. And the median was -2.68.
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 * 1.0079||+||0.528 * 1.0035||+||0.404 * 1.0111||+||0.892 * 1.0169||+||0.115 * 0.985|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0148||+||4.679 * -0.0395||-||0.327 * 0.9601|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $6,146 Mil.|
Revenue was 120125 + 114960 + 129706 + 115688 = $480,479 Mil.
Gross Profit was 30115 + 28246 + 31735 + 29001 = $119,097 Mil.
Total Current Assets was $59,632 Mil.
Total Assets was $203,985 Mil.
Property, Plant and Equipment(Net PPE) was $118,723 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,995 Mil.
Selling, General & Admin. Expense(SGA) was $92,507 Mil.
Total Current Liabilities was $67,152 Mil.
Long-Term Debt was $45,699 Mil.
Net Income was 4093 + 3593 + 4431 + 3738 = $15,855 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 5961 + 5939 + 9937 + 2069 = $23,906 Mil.
|Accounts Receivable was $5,996 Mil.
Revenue was 116830 + 114070 + 127776 + 113800 = $472,476 Mil.
Gross Profit was 29410 + 28079 + 31705 + 28330 = $117,524 Mil.
Total Current Assets was $60,002 Mil.
Total Assets was $200,969 Mil.
Property, Plant and Equipment(Net PPE) was $115,994 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,647 Mil.
Selling, General & Admin. Expense(SGA) was $89,636 Mil.
Total Current Liabilities was $72,214 Mil.
Long-Term Debt was $43,585 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)|
|=||(6146 / 480479)||/||(5996 / 472476)|
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)|
|=||(28246 / 472476)||/||(30115 / 480479)|
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 - (59632 + 118723) / 203985)||/||(1 - (60002 + 115994) / 200969)|
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))|
|=||(8647 / (8647 + 115994))||/||(8995 / (8995 + 118723))|
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)|
|=||(92507 / 480479)||/||(89636 / 472476)|
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)|
|=||((45699 + 67152) / 203985)||/||((43585 + 72214) / 200969)|
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|
|=||(15855 - 0||-||23906)||/||203985|
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 -2.63 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