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Mastercard Inc  (NYSE:MA) Beneish M-Score: -2.09 (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.

Mastercard Inc has a M-score of -2.09 signals that the company is a manipulator.

NYSE:MA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: -1.29
Current: -2.09

-3.56
-1.29

During the past 13 years, the highest Beneish M-Score of Mastercard Inc was -1.29. The lowest was -3.56. And the median was -2.53.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Mastercard Inc Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.47 -2.82 -2.25 -2.56 -2.39

Mastercard Inc Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.52 -2.39 -2.25 -2.08 -2.09

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


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 Mastercard Inc 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 * 1.2631+0.528 * 1+0.404 * 1.1585+0.892 * 1.1332+0.115 * 1.11
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9772+4.679 * -0.0068-0.327 * 1.0606
=-2.09

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep17) TTM:Last Year (Sep16) TTM:
Accounts Receivable was $1,858 Mil.
Revenue was 3398 + 3053 + 2734 + 2756 = $11,941 Mil.
Gross Profit was 3398 + 3053 + 2734 + 2756 = $11,941 Mil.
Total Current Assets was $13,231 Mil.
Total Assets was $20,914 Mil.
Property, Plant and Equipment(Net PPE) was $901 Mil.
Depreciation, Depletion and Amortization(DDA) was $413 Mil.
Selling, General, & Admin. Expense(SGA) was $5,040 Mil.
Total Current Liabilities was $7,984 Mil.
Long-Term Debt & Capital Lease Obligation was $5,393 Mil.
Net Income was 1430 + 1177 + 1081 + 933 = $4,621 Mil.
Non-Recurring Items was 26 + 14 + 11 + -22 = $29 Mil.
Cash Flow from Operations was 1755 + 1294 + 745 + 941 = $4,735 Mil.
Accounts Receivable was $1,298 Mil.
Revenue was 2880 + 2694 + 2446 + 2517 = $10,537 Mil.
Gross Profit was 2880 + 2694 + 2446 + 2517 = $10,537 Mil.
Total Current Assets was $11,776 Mil.
Total Assets was $17,323 Mil.
Property, Plant and Equipment(Net PPE) was $698 Mil.
(DDA) was $374 Mil.
Selling, General, & Admin. Expense(SGA) was $4,551 Mil.
Total Current Liabilities was $7,121 Mil.
Long-Term Debt & Capital Lease Obligation was $3,326 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)
=(1858 / 11941) / (1298 / 10537)
=0.15559836 / 0.12318497
=1.2631

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)
=(10537 / 10537) / (11941 / 11941)
=1 / 1
=1

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 - (13231 + 901) / 20914) / (1 - (11776 + 698) / 17323)
=0.32428039 / 0.27991687
=1.1585

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
=11941 / 10537
=1.1332

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))
=(374 / (374 + 698)) / (413 / (413 + 901))
=0.3488806 / 0.31430746
=1.11

6. SGAI = Sales, General and Administrative expenses Index

The ratio of c 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)
=(5040 / 11941) / (4551 / 10537)
=0.4220752 / 0.43190661
=0.9772

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)
=((5393 + 7984) / 20914) / ((3326 + 7121) / 17323)
=0.63961939 / 0.60307106
=1.0606

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
=(4621 - 29 - 4735) / 20914
=-0.0068

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.

Mastercard Inc has a M-score of -2.09 signals that the company is likely to be a manipulator.

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