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GuruFocus has detected 3 Warning Signs with Assa Abloy AB $ASAZY.
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Assa Abloy AB (OTCPK:ASAZY)
Beneish M-Score
-2.51 (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.

Assa Abloy AB has a M-score of -2.57 suggests that the company is not a manipulator.

ASAZY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.15   Max: -2.21
Current: -2.51

-3.15
-2.21

During the past 13 years, the highest Beneish M-Score of Assa Abloy AB was -2.21. The lowest was -3.15. And the median was -2.46.


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 Assa Abloy AB 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 * 0.9964+0.528 * 1.0238+0.404 * 1.0021+0.892 * 1.0249+0.115 * 0.9424
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.058+4.679 * -0.0273-0.327 * 0.9451
=-2.57

* 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 $1,436 Mil.
Revenue was 2035.06567804 + 2116.21592267 + 2112.85766197 + 2154.78727888 = $8,419 Mil.
Gross Profit was 806.533029715 + 706.962094059 + 836.820574135 + 846.669797575 = $3,197 Mil.
Total Current Assets was $3,034 Mil.
Total Assets was $10,780 Mil.
Property, Plant and Equipment(Net PPE) was $901 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $1,787 Mil.
Total Current Liabilities was $2,497 Mil.
Long-Term Debt was $1,821 Mil.
Net Income was 215.262431714 + 93.9502552406 + 248.73697413 + 243.96999145 = $802 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 54.1801743188 + 452.699033344 + 302.071245209 + 287.080187373 = $1,096 Mil.
Accounts Receivable was $1,406 Mil.
Revenue was 1905.53277214 + 2154.51270338 + 2087.64149703 + 2066.71264201 = $8,214 Mil.
Gross Profit was 754.850468859 + 829.54625727 + 807.803105464 + 801.301828125 = $3,194 Mil.
Total Current Assets was $2,938 Mil.
Total Assets was $10,528 Mil.
Property, Plant and Equipment(Net PPE) was $918 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,648 Mil.
Total Current Liabilities was $2,583 Mil.
Long-Term Debt was $1,879 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)
=(1435.83070659 / 8418.92654155) / (1405.97644915 / 8214.39961456)
=0.17054796 / 0.17115998
=0.9964

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)
=(3193.50165972 / 8214.39961456) / (3196.98549548 / 8418.92654155)
=0.38876872 / 0.3797379
=1.0238

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 - (3033.52889048 + 900.871594109) / 10780.2842496) / (1 - (2938.34088783 + 918.171571096) / 10528.4552846)
=0.63503741 / 0.63370577
=1.0021

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
=8418.92654155 / 8214.39961456
=1.0249

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))
=(176.694144309 / (176.694144309 + 918.171571096)) / (186.152712417 / (186.152712417 + 900.871594109))
=0.16138431 / 0.17124982
=0.9424

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)
=(1787.29259027 / 8418.92654155) / (1648.33256966 / 8214.39961456)
=0.21229459 / 0.20066379
=1.058

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)
=((1820.81281479 + 2496.8871639) / 10780.2842496) / ((1878.79223925 + 2583.15945991) / 10528.4552846)
=0.40051819 / 0.42379927
=0.9451

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
=(801.919652535 - 0 - 1096.03064024) / 10780.2842496
=-0.0273

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.

Assa Abloy AB has a M-score of -2.57 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.

Assa Abloy AB Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.04641.05840.97091.00520.9676
GMI 0.90931.04160.98390.99531.0215
AQI 1.02921.01530.9960.87641.0068
SGI 1.08441.07651.09530.9931.0242
DEPI 01.13240.9491.62750.9186
SGAI 1.00540.87890.97670.98091.069
LVGI 0.96880.82890.94670.96180.9801
TATA -0.0147-0.0220-0.0104-0.0186
M-score -2.57-2.34-2.42-2.49-2.58

Assa Abloy AB Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.97090.94131.01421.05751.00521.02851.0350.98690.96760.9964
GMI 0.98390.97710.97140.96420.99530.99330.99210.98671.02151.0238
AQI 0.9960.99971.00731.01520.87641.00230.99860.9971.00681.0021
SGI 1.09531.04461.01140.98970.9931.02471.03851.03881.02421.0249
DEPI 0.9490.91610.89320.89791.62750.90830.96990.95540.91860.9424
SGAI 0.97670.97930.98030.99060.98090.99380.99741.01161.0691.058
LVGI 0.94670.92350.9380.94830.96180.99510.99560.97840.98010.9451
TATA 0-0.0056-0.0033-0.0077-0.0104-0.0024-0.0062-0.0024-0.0186-0.0273
M-score -2.42-2.51-2.47-2.48-2.49-2.45-2.45-2.48-2.58-2.57
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