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GuruFocus has detected 6 Warning Signs with AGCO Corp $AGCO.
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AGCO Corp (NYSE:AGCO)
Beneish M-Score
-2.71 (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.

AGCO Corp has a M-score of -2.71 suggests that the company is not a manipulator.

AGCO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.61   Max: 0.1
Current: -2.71

-3.61
0.1

During the past 13 years, the highest Beneish M-Score of AGCO Corp was 0.10. The lowest was -3.61. And the median was -2.52.


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 AGCO 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 * 0.959+0.528 * 1.0187+0.404 * 1.0552+0.892 * 1.0211+0.115 * 0.9519
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.011+4.679 * -0.0454-0.327 * 1.0573
=-2.71

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $923 Mil.
Revenue was 1627.6 + 2094 + 1761.6 + 1995.6 = $7,479 Mil.
Gross Profit was 330.3 + 420.3 + 353.5 + 427 = $1,531 Mil.
Total Current Assets was $3,360 Mil.
Total Assets was $7,395 Mil.
Property, Plant and Equipment(Net PPE) was $1,370 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $880 Mil.
Total Current Liabilities was $2,165 Mil.
Long-Term Debt was $1,781 Mil.
Net Income was -10.1 + 62 + 40 + 50.3 = $142 Mil.
Non Operating Income was -13 + 64.7 + -24 + -16 = $12 Mil.
Cash Flow from Operations was -251.4 + 496.9 + -62.8 + 283.6 = $466 Mil.
Accounts Receivable was $943 Mil.
Revenue was 1559.3 + 1959 + 1736.4 + 2069.3 = $7,324 Mil.
Gross Profit was 314.7 + 397.4 + 365.7 + 449.6 = $1,527 Mil.
Total Current Assets was $3,213 Mil.
Total Assets was $6,976 Mil.
Property, Plant and Equipment(Net PPE) was $1,380 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $852 Mil.
Total Current Liabilities was $2,263 Mil.
Long-Term Debt was $1,258 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)
=(923 / 7478.8) / (942.5 / 7324)
=0.12341552 / 0.12868651
=0.959

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)
=(1527.4 / 7324) / (1531.1 / 7478.8)
=0.20854724 / 0.20472536
=1.0187

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 - (3359.5 + 1369.6) / 7394.6) / (1 - (3213.1 + 1380) / 6976.2)
=0.36046575 / 0.34160431
=1.0552

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
=7478.8 / 7324
=1.0211

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))
=(262 / (262 + 1380)) / (275.8 / (275.8 + 1369.6))
=0.15956151 / 0.16761882
=0.9519

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)
=(879.9 / 7478.8) / (852.3 / 7324)
=0.11765256 / 0.11637084
=1.011

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)
=((1780.5 + 2165.2) / 7394.6) / ((1257.5 + 2263.3) / 6976.2)
=0.53359208 / 0.50468737
=1.0573

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
=(142.2 - 11.7 - 466.3) / 7394.6
=-0.0454

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.

AGCO Corp has a M-score of -2.71 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.

AGCO Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9010.86251.13991.19370.86030.8190.93951.13671.13061.0722
GMI 0.97871.02931.04770.88630.90150.94990.96171.04291.01681.0219
AQI 0.97130.83791.14370.97361.27730.93560.89891.151.09781.0619
SGI 1.25631.23380.7871.04011.27211.13551.08280.90140.76790.9924
DEPI 1.0570.98431.13040.94651.15060.88441.00850.89980.95680.9641
SGAI 0.91940.93381.11061.0560.98741.05490.96561.01431.1151.0261
LVGI 0.92831.08130.79911.00991.14960.910.98040.97791.10211.0935
TATA -0.04480.026-0.0383-0.0372-0.017-0.0142-0.01890.0029-0.0275-0.0311
M-score -2.53-2.34-2.58-2.53-2.41-2.64-2.60-2.35-2.71-2.57

AGCO Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.13670.99941.05161.10371.13061.13931.04811.2251.07220.959
GMI 1.04291.05981.07821.02891.01681.00160.98371.0131.02191.0187
AQI 1.151.08871.10121.06381.09781.12531.10671.15591.06191.0552
SGI 0.90140.84840.80730.79160.76790.80550.86190.91020.99241.0211
DEPI 0.89980.8610.90670.9570.95681.03730.98211.00240.96410.9519
SGAI 1.01431.00681.01871.0561.1151.12621.11671.08711.02611.011
LVGI 0.97791.05631.07931.06851.10211.04591.04581.09891.09351.0573
TATA 0.0029-0.035-0.0473-0.0522-0.0275-0.0226-0.0285-0.0125-0.0311-0.0454
M-score -2.35-2.75-2.78-2.81-2.71-2.61-2.69-2.39-2.57-2.71
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