FMC Beneish M-Score Calculation
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 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 * 1.0284 | + | 0.528 * 0.9958 | + | 0.404 * 1.0072 | + | 0.892 * 1.0389 | + | 0.115 * 0.9607 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9628 | + | 4.679 * -0.011 | - | 0.327 * 0.9748 |
| = | -2.46 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| This Year (Sep20) TTM: | Last Year (Sep19) TTM: |
Accounts Receivable was $2,138 Mil.
Revenue was 1084.6 + 1155.3 + 1250 + 1197.3 = $4,687 Mil.
Gross Profit was 466.4 + 522.7 + 561.5 + 556 = $2,107 Mil.
Total Current Assets was $4,015 Mil.
Total Assets was $9,772 Mil.
Property, Plant and Equipment(Net PPE) was $739 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General, & Admin. Expense(SGA) was $772 Mil.
Total Current Liabilities was $2,368 Mil.
Long-Term Debt & Capital Lease Obligation was $3,028 Mil.
Net Income was 111.4 + 184.4 + 206.2 + -3.2 = $499 Mil.
Non Operating Income was -18.6 + -21.7 + -9.2 + -49.9 = $-99 Mil.
Cash Flow from Operations was 340.9 + 234.6 + -328.3 + 458.9 = $706 Mil.
|
Accounts Receivable was $2,001 Mil.
Revenue was 1014.3 + 1206.1 + 1192.1 + 1099.4 = $4,512 Mil.
Gross Profit was 432.4 + 550.5 + 544.7 + 491.7 = $2,019 Mil.
Total Current Assets was $4,078 Mil.
Total Assets was $9,804 Mil.
Property, Plant and Equipment(Net PPE) was $728 Mil.
Depreciation, Depletion and Amortization(DDA) was $150 Mil.
Selling, General, & Admin. Expense(SGA) was $772 Mil.
Total Current Liabilities was $2,522 Mil.
Long-Term Debt & Capital Lease Obligation was $3,032 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (2137.9 / 4687.2) | / | (2001.1 / 4511.9) |
| = | 0.45611452 | / | 0.44351604 |
| | = | 1.0284 |
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) |
| = | (2019.3 / 4511.9) | / | (2106.6 / 4687.2) |
| = | 0.44754981 | / | 0.44943676 |
| | = | 0.9958 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (4015.2 + 739.2) / 9772.2) | / | (1 - (4077.6 + 728.4) / 9803.8) |
| = | 0.51347701 | / | 0.50978192 |
| | = | 1.0072 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 |
| = | 4687.2 | / | 4511.9 |
| | = | 1.0389 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (149.9 / (149.9 + 728.4)) | / | (159.7 / (159.7 + 739.2)) |
| = | 0.17067061 | / | 0.17766159 |
| | = | 0.9607 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
| = | (771.9 / 4687.2) | / | (771.7 / 4511.9) |
| = | 0.16468254 | / | 0.17103659 |
| | = | 0.9628 |
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 in leverage
| LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
| = | ((3028.3 + 2368.3) / 9772.2) | / | ((3032.4 + 2521.5) / 9803.8) |
| = | 0.55224003 | / | 0.56650482 |
| | = | 0.9748 |
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 |
| = | (498.8 - -99.4 | - | 706.1) | / | 9772.2 |
| | = | -0.011 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
FMC has a M-score of -2.46 suggests that the company is unlikely to be a manipulator.
Excel Add-In GURUF
API
My Portfolios
Create New Portfolio
Portfolio Contest
My Gurus
Personalize
My Gurus
1.47(1.3%) Volume: 308,298 1:35PM EST
Email Alerts
Stock PDF
RSS
Website
Filings
Manual of Stocks™ Web APP
FMC has been successfully added to your 
