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GuruFocus has detected 5 Warning Signs with E.I. du Pont de Nemours & Co $DD.
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E.I. du Pont de Nemours & Co (NYSE:DD)
Beneish M-Score
-2.50 (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.

E.I. du Pont de Nemours & Co has a M-score of -2.50 suggests that the company is not a manipulator.

DD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: -1.6
Current: -2.5

-3.56
-1.6

During the past 13 years, the highest Beneish M-Score of E.I. du Pont de Nemours & Co was -1.60. The lowest was -3.56. And the median was -2.59.


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 E.I. du Pont de Nemours & Co 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 * 1.0511+0.528 * 0.9778+0.404 * 0.9589+0.892 * 1.0002+0.115 * 1.0892
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9839+4.679 * -0.0081-0.327 * 1.0472
=-2.50

* 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 $7,272 Mil.
Revenue was 8049 + 5512 + 4901 + 7112 = $25,574 Mil.
Gross Profit was 3678 + 2365 + 1811 + 3122 = $10,976 Mil.
Total Current Assets was $19,050 Mil.
Total Assets was $41,850 Mil.
Property, Plant and Equipment(Net PPE) was $9,084 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,179 Mil.
Selling, General & Admin. Expense(SGA) was $4,451 Mil.
Total Current Liabilities was $9,810 Mil.
Long-Term Debt was $8,099 Mil.
Net Income was 1113 + 265 + 2 + 1020 = $2,400 Mil.
Non Operating Income was -177 + -426 + -203 + 63 = $-743 Mil.
Cash Flow from Operations was -1624 + 4377 + 426 + 303 = $3,482 Mil.
Accounts Receivable was $6,917 Mil.
Revenue was 7777 + 5444 + 4971 + 7376 = $25,568 Mil.
Gross Profit was 3535 + 2035 + 1887 + 3273 = $10,730 Mil.
Total Current Assets was $17,865 Mil.
Total Assets was $41,801 Mil.
Property, Plant and Equipment(Net PPE) was $9,649 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,380 Mil.
Selling, General & Admin. Expense(SGA) was $4,523 Mil.
Total Current Liabilities was $8,955 Mil.
Long-Term Debt was $8,126 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)
=(7272 / 25574) / (6917 / 25568)
=0.28435129 / 0.27053348
=1.0511

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)
=(10730 / 25568) / (10976 / 25574)
=0.41966521 / 0.42918589
=0.9778

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 - (19050 + 9084) / 41850) / (1 - (17865 + 9649) / 41801)
=0.32774194 / 0.34178608
=0.9589

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
=25574 / 25568
=1.0002

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))
=(1380 / (1380 + 9649)) / (1179 / (1179 + 9084))
=0.12512467 / 0.11487869
=1.0892

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)
=(4451 / 25574) / (4523 / 25568)
=0.17404395 / 0.17690081
=0.9839

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)
=((8099 + 9810) / 41850) / ((8126 + 8955) / 41801)
=0.42793309 / 0.40862659
=1.0472

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
=(2400 - -743 - 3482) / 41850
=-0.0081

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.

E.I. du Pont de Nemours & Co has a M-score of -2.50 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.

E.I. du Pont de Nemours & Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.08231.02031.140.77530.88190.91571.35180.71991.1861.0728
GMI 1.20290.99170.93370.96790.75981.02750.92410.97070.99150.969
AQI 1.11950.90840.9540.96511.41680.90280.86531.04011.1921.0022
SGI 0.99091.08370.85841.05751.26430.96640.83171.12040.78490.9797
DEPI 1.03910.97790.96071.09971.04130.87921.07910.78961.06741.0865
SGAI 1.06520.97431.11540.80051.02351.61631.09120.85611.14750.9553
LVGI 0.96731.12811.03410.97530.97821.01910.97180.97470.9560.9754
TATA -0.0708-0.018-0.0739-0.0365-0.0306-0.03980.0350.01070.0131-0.0032
M-score -2.58-2.55-2.91-2.78-2.45-2.92-2.23-2.57-2.37-2.44

E.I. du Pont de Nemours & Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.71990.89660.96940.82211.1861.08891.02181.12691.07281.0511
GMI 0.97070.95080.93660.99390.99150.99891.02881.02210.9690.9778
AQI 1.04011.03671.00791.17641.1921.12871.1831.0221.00220.9589
SGI 1.12041.06140.96340.970.78490.83020.90180.9430.97971.0002
DEPI 0.78960.98081.02220.80871.06740.89630.9261.16291.08651.0892
SGAI 0.85610.79790.77770.71091.14751.111.05021.02170.95530.9839
LVGI 0.97470.99011.02710.91640.9560.96790.9030.98980.97541.0472
TATA 0.0107-0.0037-0.0061-0.01050.01310.01160.0055-0.0013-0.0032-0.0081
M-score -2.57-2.51-2.57-2.60-2.37-2.46-2.42-2.38-2.44-2.50
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