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GuruFocus has detected 2 Warning Signs with Mueller Industries Inc $MLI.
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Mueller Industries Inc (NYSE:MLI)
Beneish M-Score
-2.79 (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.

Mueller Industries Inc has a M-score of -2.79 suggests that the company is not a manipulator.

MLI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.05   Max: -1.43
Current: -2.79

-4.05
-1.43

During the past 13 years, the highest Beneish M-Score of Mueller Industries Inc was -1.43. The lowest was -4.05. And the median was -2.52.


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 Mueller Industries 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 * 1.1285+0.528 * 0.8967+0.404 * 1.0059+0.892 * 1.0025+0.115 * 1.086
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.997+4.679 * -0.0252-0.327 * 1.8416
=-2.79

* 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 $312 Mil.
Revenue was 577.92 + 472.158 + 506.584 + 544.071 = $2,101 Mil.
Gross Profit was 89.493 + 76.029 + 81.916 + 88.011 = $335 Mil.
Total Current Assets was $756 Mil.
Total Assets was $1,305 Mil.
Property, Plant and Equipment(Net PPE) was $296 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $232 Mil.
Long-Term Debt was $490 Mil.
Net Income was 29.987 + 17.322 + 25.978 + 27.797 = $101 Mil.
Non Operating Income was 0.551 + -4.41 + 1.242 + 0.515 = $-2 Mil.
Cash Flow from Operations was -11.422 + 87.191 + 28.721 + 31.529 = $136 Mil.
Accounts Receivable was $276 Mil.
Revenue was 532.809 + 471.983 + 535.184 + 555.593 = $2,096 Mil.
Gross Profit was 86.167 + 60.647 + 68.017 + 85.228 = $300 Mil.
Total Current Assets was $821 Mil.
Total Assets was $1,361 Mil.
Property, Plant and Equipment(Net PPE) was $278 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $203 Mil.
Long-Term Debt was $206 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)
=(312.095 / 2100.733) / (275.881 / 2095.569)
=0.14856481 / 0.13164969
=1.1285

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)
=(300.059 / 2095.569) / (335.449 / 2100.733)
=0.14318736 / 0.15968188
=0.8967

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 - (756.085 + 296.36) / 1304.921) / (1 - (820.761 + 278.481) / 1361.02)
=0.19347991 / 0.19233957
=1.0059

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
=2100.733 / 2095.569
=1.0025

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))
=(35.604 / (35.604 + 278.481)) / (34.541 / (34.541 + 296.36))
=0.11335785 / 0.1043847
=1.086

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)
=(137.25 / 2100.733) / (137.319 / 2095.569)
=0.06533434 / 0.06552826
=0.997

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)
=((489.787 + 231.688) / 1304.921) / ((206 + 202.608) / 1361.02)
=0.55288788 / 0.30022189
=1.8416

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
=(101.084 - -2.102 - 136.019) / 1304.921
=-0.0252

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.

Mueller Industries Inc has a M-score of -2.79 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.

Mueller Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.06730.71511.72680.88420.79111.19711.01740.92381.02971.0408
GMI 1.15671.08710.89351.02871.10720.95860.94921.01310.98070.8556
AQI 0.98810.92380.80170.90850.93411.28860.91991.031.81670.924
SGI 1.07440.94830.60481.33131.17380.90580.98571.09530.88820.9789
DEPI 0.93030.90370.97960.95190.97621.2881.01670.96991.09741.0337
SGAI 0.9461.00741.40930.84480.88271.07861.03050.93131.09921.0454
LVGI 0.95810.71570.95030.96960.97751.53830.8080.97880.92570.9675
TATA -0.0537-0.0943-0.06140.0259-0.0509-0.02320.03250.0089-0.0545-0.0384
M-score -2.51-3.13-2.64-2.16-2.70-2.55-2.32-2.39-2.47-2.74

Mueller Industries Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.92380.89910.83870.96251.02970.99471.06561.04031.04081.1285
GMI 1.01311.00320.98810.99780.98070.95530.96040.89340.85560.8967
AQI 1.030.87430.96981.70361.81671.8361.58890.91480.9241.0059
SGI 1.09531.07080.99660.93550.88820.90050.93330.94920.97891.0025
DEPI 0.96990.96991.03941.10861.09741.06381.03370.96311.03371.086
SGAI 0.93130.95121.03251.06411.09921.10291.03291.03631.04540.997
LVGI 0.97880.94140.87730.95610.92570.92680.98650.92320.96751.8416
TATA 0.0089-0.0298-0.045-0.0637-0.0545-0.0535-0.0684-0.0299-0.0384-0.0252
M-score -2.39-2.67-2.82-2.57-2.47-2.50-2.58-2.70-2.74-2.79
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