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GuruFocus has detected 2 Warning Signs with Masco Corp $MAS.
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Masco Corp (NYSE:MAS)
Beneish M-Score
0.00 (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.

Masco Corp has a M-score of signals that the company is a manipulator.

During the past 13 years, the highest Beneish M-Score of Masco Corp was 0.00. The lowest was -3.71. And the median was -2.67.


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 Masco 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

* 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 $1,144 Mil.
Revenue was 1777 + 1759 + 1877 + 2001 = $7,414 Mil.
Gross Profit was 608 + 573 + 614 + 700 = $2,495 Mil.
Total Current Assets was $2,958 Mil.
Total Assets was $5,139 Mil.
Property, Plant and Equipment(Net PPE) was $1,074 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $1,423 Mil.
Total Current Liabilities was $1,424 Mil.
Long-Term Debt was $2,996 Mil.
Net Income was 140 + 98 + 134 + 150 = $522 Mil.
Non Operating Income was 3 + 1 + 1 + 5 = $10 Mil.
Cash Flow from Operations was -149 + 344 + 268 + 184 = $647 Mil.
Accounts Receivable was $1,036 Mil.
Revenue was 1720 + 1715 + 1839 + 1929 = $7,203 Mil.
Gross Profit was 569 + 532 + 589 + 637 = $2,327 Mil.
Total Current Assets was $4,248 Mil.
Total Assets was $6,554 Mil.
Property, Plant and Equipment(Net PPE) was $1,040 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $1,344 Mil.
Total Current Liabilities was $2,789 Mil.
Long-Term Debt was $2,993 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)
=(1144 / 7414) / (1036 / 7203)
=0.15430267 / 0.14382896
=

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)
=(2327 / 7203) / (2495 / 7414)
=0.32305984 / 0.33652549
=

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 - (2958 + 1074) / 5139) / (1 - (4248 + 1040) / 6554)
=0.21541156 / 0.19316448
=

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
=7414 / 7203
=

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))
=(0 / (0 + 1040)) / (0 / (0 + 1074))
=0 / 0
=

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)
=(1423 / 7414) / (1344 / 7203)
=0.19193418 / 0.18658892
=

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)
=((2996 + 1424) / 5139) / ((2993 + 2789) / 6554)
=0.86008951 / 0.88220934
=

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
=(522 - 10 - 647) / 5139
=-0.0263

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.

Masco Corp has a M-score of signals that the company is likely to 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.

Masco Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.94410.86461.19770.94031.07460.97651.19290.78821.02041.0436
GMI 1.00781.09890.96041.05770.98240.9550.90070.98540.93210.945
AQI 1.10320.98370.95590.8850.87341.07570.9481.09680.65530.9628
SGI 0.92260.82240.82160.96070.95781.04530.90211.03621.01941.0301
DEPI 0.98690.9460.88210.82120.9631.03421.07430.93951.20081.0216
SGAI 1.06711.10721.14890.97781.00810.95170.97280.9650.97511.0172
LVGI 0.95891.06951.0191.15521.12891.00420.95510.96951.19221.0221
TATA -0.0875-0.1195-0.0989-0.1819-0.122-0.0611-0.05260.0337-0.0607-0.0469
M-score -2.96-3.32-3.00-3.50-3.13-2.73-2.68-2.44-2.94-2.68

Masco Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score
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