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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 Exxon Mobil Corp was -1.26. The lowest was -3.19. And the median was -2.60.
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 Exxon Mobil Corp 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 * 1.2102||+||0.528 * 0.9432||+||0.404 * 1.008||+||0.892 * 0.6948||+||0.115 * 0.9364|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3608||+||4.679 * -0.0356||-||0.327 * 1.0587|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $21,827 Mil.|
Revenue was 57694 + 48707 + 59807 + 67344 = $233,552 Mil.
Gross Profit was 17053 + 15624 + 17712 + 20641 = $71,030 Mil.
Total Current Assets was $45,828 Mil.
Total Assets was $342,473 Mil.
Property, Plant and Equipment(Net PPE) was $254,062 Mil.
Depreciation, Depletion and Amortization(DDA) was $18,883 Mil.
Selling, General & Admin. Expense(SGA) was $11,196 Mil.
Total Current Liabilities was $51,504 Mil.
Long-Term Debt was $29,499 Mil.
Net Income was 1700 + 1810 + 2780 + 4240 = $10,530 Mil.
Non Operating Income was 0 + 0 + -251 + 78 = $-173 Mil.
Cash Flow from Operations was 4519 + 4812 + 4380 + 9174 = $22,885 Mil.
|Accounts Receivable was $25,957 Mil.
Revenue was 74113 + 67618 + 87276 + 107130 = $336,137 Mil.
Gross Profit was 21601 + 20660 + 24570 + 29592 = $96,423 Mil.
Total Current Assets was $51,647 Mil.
Total Assets was $348,260 Mil.
Property, Plant and Equipment(Net PPE) was $253,653 Mil.
Depreciation, Depletion and Amortization(DDA) was $17,571 Mil.
Selling, General & Admin. Expense(SGA) was $11,841 Mil.
Total Current Liabilities was $58,372 Mil.
Long-Term Debt was $19,431 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)|
|=||(21827 / 233552)||/||(25957 / 336137)|
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)|
|=||(96423 / 336137)||/||(71030 / 233552)|
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 - (45828 + 254062) / 342473)||/||(1 - (51647 + 253653) / 348260)|
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))|
|=||(17571 / (17571 + 253653))||/||(18883 / (18883 + 254062))|
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)|
|=||(11196 / 233552)||/||(11841 / 336137)|
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)|
|=||((29499 + 51504) / 342473)||/||((19431 + 58372) / 348260)|
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|
|=||(10530 - -173||-||22885)||/||342473|
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.
Exxon Mobil Corp has a M-score of -2.84 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
Exxon Mobil Corp Annual Data
Exxon Mobil Corp Quarterly Data