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GuruFocus has detected 6 Warning Signs with FMC Corp $FMC.
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FMC Corp (NYSE:FMC)
Beneish M-Score
-2.90 (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.

FMC Corp has a M-score of -2.90 suggests that the company is not a manipulator.

FMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -1.27
Current: -2.9

-3.35
-1.27

During the past 13 years, the highest Beneish M-Score of FMC Corp was -1.27. The lowest was -3.35. And the median was -2.54.


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 FMC 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 * 0.9647+0.528 * 0.8763+0.404 * 0.8562+0.892 * 0.9554+0.115 * 0.508
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9756+4.679 * -0.0364-0.327 * 1.0099
=-2.90

* 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 $1,631 Mil.
Revenue was 596 + 865.6 + 807.7 + 810.3 = $3,080 Mil.
Gross Profit was 216.2 + 337.6 + 279.5 + 301.3 = $1,135 Mil.
Total Current Assets was $3,554 Mil.
Total Assets was $6,036 Mil.
Property, Plant and Equipment(Net PPE) was $535 Mil.
Depreciation, Depletion and Amortization(DDA) was $136 Mil.
Selling, General & Admin. Expense(SGA) was $513 Mil.
Total Current Liabilities was $1,489 Mil.
Long-Term Debt was $1,790 Mil.
Net Income was -124.2 + 15.9 + 79.7 + 65.2 = $37 Mil.
Non Operating Income was 0.1 + -107.2 + 0.4 + 0 = $-107 Mil.
Cash Flow from Operations was -34.9 + 110 + 163.3 + 124.5 = $363 Mil.
Accounts Receivable was $1,769 Mil.
Revenue was 606.4 + 899.3 + 830.7 + 887.1 = $3,224 Mil.
Gross Profit was 216 + 298.6 + 220.3 + 305.8 = $1,041 Mil.
Total Current Assets was $2,955 Mil.
Total Assets was $6,390 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $118 Mil.
Selling, General & Admin. Expense(SGA) was $550 Mil.
Total Current Liabilities was $1,451 Mil.
Long-Term Debt was $1,986 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)
=(1630.6 / 3079.6) / (1769.2 / 3223.5)
=0.52948435 / 0.54884442
=0.9647

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)
=(1040.7 / 3223.5) / (1134.6 / 3079.6)
=0.32284784 / 0.36842447
=0.8763

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 - (3554.2 + 535.1) / 6036.3) / (1 - (2955.2 + 1027.8) / 6390.4)
=0.32254858 / 0.37672133
=0.8562

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
=3079.6 / 3223.5
=0.9554

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))
=(117.8 / (117.8 + 1027.8)) / (135.8 / (135.8 + 535.1))
=0.10282821 / 0.20241467
=0.508

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)
=(512.7 / 3079.6) / (550.1 / 3223.5)
=0.16648266 / 0.17065302
=0.9756

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)
=((1790.4 + 1488.8) / 6036.3) / ((1986.2 + 1451.3) / 6390.4)
=0.54324669 / 0.53791625
=1.0099

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
=(36.6 - -106.7 - 362.9) / 6036.3
=-0.0364

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.

FMC Corp has a M-score of -2.90 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.

FMC Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99340.96921.20151.03191.12070.97691.58231.03721.1491.047
GMI 0.99180.96841.00820.92620.93020.99560.94911.03231.13220.894
AQI 0.93580.93911.051.0431.0421.1920.70441.37891.34651.0085
SGI 1.12231.18320.90721.10260.97431.18020.87371.04091.00550.9431
DEPI 0.91041.07151.00240.91761.38510.8481.64160.72090.89390.8492
SGAI 0.98610.90281.05481.15711.01291.06181.11671.14221.24430.7373
LVGI 0.94611.05410.91591.06791.03431.03891.26390.95430.96350.9558
TATA -0.04750.0036-0.0326-0.0556-0.00430.0131-0.0108-0.00680.1769-0.0296
M-score -2.62-2.36-2.49-2.70-2.40-2.24-2.29-2.31-1.34-2.64

FMC Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.03720.92311.1070.90741.1491.12850.90210.99191.0470.9647
GMI 1.03231.03621.0951.1981.13221.1451.08120.95650.8940.8763
AQI 1.37890.96741.43341.55941.34651.85371.23091.15961.00850.8562
SGI 1.04091.06191.12351.1841.00551.01970.96720.95670.94310.9554
DEPI 0.72090.66350.69870.51910.89390.90310.73840.88650.84920.508
SGAI 1.14221.48941.49771.36961.24430.69780.66820.65380.73730.9756
LVGI 0.95431.05351.02630.98620.96350.90230.93390.95480.95581.0099
TATA -0.00680.01510.11310.14590.17690.12340.0178-0.0173-0.0296-0.0364
M-score -2.31-2.56-1.65-1.50-1.34-1.27-2.33-2.50-2.64-2.90
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