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Dow Chemical Co (NYSE:DOW)
Beneish M-Score
-2.45 (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.

Dow Chemical Co has a M-score of -2.45 suggests that the company is not a manipulator.

DOW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.19   Max: -1.08
Current: -2.45

-3.19
-1.08

During the past 13 years, the highest Beneish M-Score of Dow Chemical Co was -1.08. The lowest was -3.19. And the median was -2.69.


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 Dow Chemical 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 * 1.033+0.528 * 1.0819+0.404 * 1.0287+0.892 * 1.0759+0.115 * 1.0538
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0764+4.679 * -0.0231-0.327 * 1.0213
=-2.45

* 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 $4,991 Mil.
Revenue was 13230 + 13020 + 12483 + 11952 = $50,685 Mil.
Gross Profit was 3033 + 2446 + 2642 + 2677 = $10,798 Mil.
Total Current Assets was $24,640 Mil.
Total Assets was $80,828 Mil.
Property, Plant and Equipment(Net PPE) was $23,768 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,033 Mil.
Selling, General & Admin. Expense(SGA) was $3,429 Mil.
Total Current Liabilities was $13,193 Mil.
Long-Term Debt was $20,471 Mil.
Net Income was 888 + 52 + 804 + 3208 = $4,952 Mil.
Non Operating Income was -273 + -965 + 66 + 2178 = $1,006 Mil.
Cash Flow from Operations was 476 + 1863 + 1345 + 2131 = $5,815 Mil.
Accounts Receivable was $4,491 Mil.
Revenue was 10703 + 11462 + 12036 + 12910 = $47,111 Mil.
Gross Profit was 2752 + 2656 + 2687 + 2764 = $10,859 Mil.
Total Current Assets was $23,334 Mil.
Total Assets was $68,440 Mil.
Property, Plant and Equipment(Net PPE) was $18,420 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,494 Mil.
Selling, General & Admin. Expense(SGA) was $2,961 Mil.
Total Current Liabilities was $11,682 Mil.
Long-Term Debt was $16,229 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)
=(4991 / 50685) / (4491 / 47111)
=0.09847095 / 0.09532806
=1.033

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)
=(10859 / 47111) / (10798 / 50685)
=0.23049819 / 0.21304133
=1.0819

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 - (24640 + 23768) / 80828) / (1 - (23334 + 18420) / 68440)
=0.40109863 / 0.38991818
=1.0287

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
=50685 / 47111
=1.0759

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))
=(2494 / (2494 + 18420)) / (3033 / (3033 + 23768))
=0.11925026 / 0.11316742
=1.0538

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)
=(3429 / 50685) / (2961 / 47111)
=0.06765315 / 0.06285156
=1.0764

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)
=((20471 + 13193) / 80828) / ((16229 + 11682) / 68440)
=0.41648934 / 0.40781707
=1.0213

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
=(4952 - 1006 - 5815) / 80828
=-0.0231

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.

Dow Chemical Co has a M-score of -2.45 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.

Dow Chemical Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.09390.59323.10950.41970.94981.09380.96760.93161.0381.1589
GMI 1.16361.3980.7450.86770.98510.94270.9530.90320.82031.0272
AQI 1.00471.02961.29080.93051.0310.9910.95460.98611.00191.0578
SGI 1.08931.07250.78191.19611.11760.94671.00521.0190.83860.9873
DEPI 0.99390.97661.00330.9391.00511.07051.00221.00811.06751.1391
SGAI 1.02890.98341.61790.87710.95621.0841.05151.00791.14071.1264
LVGI 1.00361.13341.05051.01470.93080.9780.91791.06570.91131.0336
TATA -0.0624-0.1113-0.0447-0.0419-0.0291-0.0264-0.0956-0.0497-0.0689-0.0156
M-score -2.52-3.13-1.08-3.12-2.52-2.60-2.98-2.84-2.99-2.40

Dow Chemical Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.93160.86630.95220.98341.0381.13861.22211.19721.15891.033
GMI 0.90320.86560.82380.82360.82030.83630.87170.92931.02721.0819
AQI 0.98610.97260.96990.99651.00191.04361.06121.07741.05781.0287
SGI 1.0190.98110.94040.88880.83860.84010.85360.90140.98731.0759
DEPI 1.00811.01641.04271.10321.06751.09351.25791.18541.13911.0538
SGAI 1.00791.03541.07561.09481.14071.14471.12391.15071.12641.0764
LVGI 1.06571.05951.04940.98210.91130.91380.93760.93491.03361.0213
TATA -0.0497-0.0622-0.0578-0.0696-0.0689-0.0403-0.0416-0.026-0.0156-0.0231
M-score -2.84-3.02-2.98-3.01-2.99-2.74-2.62-2.50-2.40-2.45
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