Switch to:
GuruFocus has detected 5 Warning Signs with Eastman Chemical Co $EMN.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Eastman Chemical Co (NYSE:EMN)
Beneish M-Score
-2.55 (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.

Eastman Chemical Co has a M-score of -2.55 suggests that the company is not a manipulator.

EMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: -0.94
Current: -2.55

-3.62
-0.94

During the past 13 years, the highest Beneish M-Score of Eastman Chemical Co was -0.94. The lowest was -3.62. 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 Eastman 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 * 1.0742+0.528 * 1.0503+0.404 * 0.952+0.892 * 0.9612+0.115 * 1.0156
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9376+4.679 * -0.0281-0.327 * 0.968
=-2.55

* 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 $982 Mil.
Revenue was 2303 + 2188 + 2287 + 2297 = $9,075 Mil.
Gross Profit was 625 + 490 + 621 + 605 = $2,341 Mil.
Total Current Assets was $3,165 Mil.
Total Assets was $15,755 Mil.
Property, Plant and Equipment(Net PPE) was $5,321 Mil.
Depreciation, Depletion and Amortization(DDA) was $578 Mil.
Selling, General & Admin. Expense(SGA) was $694 Mil.
Total Current Liabilities was $1,637 Mil.
Long-Term Debt was $6,578 Mil.
Net Income was 278 + 116 + 232 + 255 = $881 Mil.
Non Operating Income was 4 + -75 + -3 + 11 = $-63 Mil.
Cash Flow from Operations was 52 + 394 + 450 + 490 = $1,386 Mil.
Accounts Receivable was $951 Mil.
Revenue was 2236 + 2225 + 2447 + 2533 = $9,441 Mil.
Gross Profit was 634 + 509 + 695 + 720 = $2,558 Mil.
Total Current Assets was $2,863 Mil.
Total Assets was $15,616 Mil.
Property, Plant and Equipment(Net PPE) was $5,185 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $770 Mil.
Total Current Liabilities was $1,847 Mil.
Long-Term Debt was $6,565 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)
=(982 / 9075) / (951 / 9441)
=0.10820937 / 0.10073085
=1.0742

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)
=(2558 / 9441) / (2341 / 9075)
=0.27094587 / 0.25796143
=1.0503

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 - (3165 + 5321) / 15755) / (1 - (2863 + 5185) / 15616)
=0.46137734 / 0.48463115
=0.952

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
=9075 / 9441
=0.9612

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))
=(573 / (573 + 5185)) / (578 / (578 + 5321))
=0.09951372 / 0.09798271
=1.0156

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)
=(694 / 9075) / (770 / 9441)
=0.07647383 / 0.08155916
=0.9376

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)
=((6578 + 1637) / 15755) / ((6565 + 1847) / 15616)
=0.52142177 / 0.53867828
=0.968

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
=(881 - -63 - 1386) / 15755
=-0.0281

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.

Eastman Chemical Co has a M-score of -2.55 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.

Eastman Chemical Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.79460.51151.54121.48050.94381.18590.90131.04390.83551.0981
GMI 1.06921.04250.71310.941.14251.00510.73251.27350.87181.025
AQI 1.3850.86320.97210.99011.04193.29120.96511.22110.99990.9737
SGI 1.00750.98480.65361.32891.22871.12871.1541.01891.01270.9337
DEPI 0.8851.33740.95171.01180.99081.01880.86471.12810.81141.0112
SGAI 0.98551.0131.34010.88990.9021.18620.86791.14881.00840.9766
LVGI 1.02390.97381.01231.02250.92841.26770.92121.19360.96070.9464
TATA -0.0766-0.0543-0.1104-0.00420.0002-0.0583-0.0109-0.0434-0.0503-0.0292
M-score -2.85-3.18-3.04-1.79-2.20-1.66-2.61-2.47-2.93-2.56

Eastman Chemical Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.04390.96720.91710.94970.83550.97550.98541.01011.09811.0742
GMI 1.27351.24821.21241.15450.87180.87140.90730.93931.0251.0503
AQI 1.22111.23871.20961.19520.99990.99520.99070.99030.97370.952
SGI 1.01891.03391.03951.03481.01270.97680.94530.92560.93370.9612
DEPI 1.12811.01410.96230.92290.81140.90060.9380.98381.01121.0156
SGAI 1.14881.15551.19721.19821.00321.02771.00561.00890.98170.9376
LVGI 1.19361.15941.13291.13180.96070.94180.94820.94510.94640.968
TATA -0.0434-0.0561-0.0659-0.0498-0.0503-0.041-0.0381-0.0458-0.0292-0.0281
M-score -2.47-2.59-2.71-2.65-2.93-2.78-2.76-2.77-2.56-2.55
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK