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GuruFocus has detected 2 Warning Signs with Monster Beverage Corp $MNST.
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Monster Beverage Corp (NAS:MNST)
Beneish M-Score
-2.12 (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.

Monster Beverage Corp has a M-score of -2.12 signals that the company is a manipulator.

MNST' s Beneish M-Score Range Over the Past 10 Years
Min: -3.82   Max: -0.13
Current: -2.12

-3.82
-0.13

During the past 13 years, the highest Beneish M-Score of Monster Beverage Corp was -0.13. The lowest was -3.82. And the median was -2.07.


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 Monster Beverage 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 * 1.0908+0.528 * 0.9452+0.404 * 1.7275+0.892 * 1.1208+0.115 * 1.3624
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1416+4.679 * -0.0122-0.327 * 1.1754
=-2.12

* 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 $509 Mil.
Revenue was 742.146 + 753.765 + 787.954 + 827.488 = $3,111 Mil.
Gross Profit was 480.874 + 498.113 + 502.975 + 517.814 = $2,000 Mil.
Total Current Assets was $1,617 Mil.
Total Assets was $4,350 Mil.
Property, Plant and Equipment(Net PPE) was $190 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $905 Mil.
Total Current Liabilities was $470 Mil.
Long-Term Debt was $0 Mil.
Net Income was 177.98 + 172.947 + 191.643 + 184.219 = $727 Mil.
Non Operating Income was 0 + -5.002 + 0 + 0 = $-5 Mil.
Cash Flow from Operations was 192.964 + 280.653 + 173.147 + 137.996 = $785 Mil.
Accounts Receivable was $417 Mil.
Revenue was 680.186 + 645.433 + 756.619 + 693.722 = $2,776 Mil.
Gross Profit was 423.098 + 403.361 + 465.476 + 394.508 = $1,686 Mil.
Total Current Assets was $3,793 Mil.
Total Assets was $5,883 Mil.
Property, Plant and Equipment(Net PPE) was $99 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $707 Mil.
Total Current Liabilities was $541 Mil.
Long-Term Debt was $0 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)
=(509.477 / 3111.353) / (416.704 / 2775.96)
=0.16374773 / 0.15011167
=1.0908

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)
=(1686.443 / 2775.96) / (1999.776 / 3111.353)
=0.60751704 / 0.64273517
=0.9452

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 - (1616.816 + 189.631) / 4349.747) / (1 - (3792.872 + 99.257) / 5883.484)
=0.58470067 / 0.33846527
=1.7275

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
=3111.353 / 2775.96
=1.1208

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))
=(33.414 / (33.414 + 99.257)) / (43.004 / (43.004 + 189.631))
=0.2518561 / 0.18485611
=1.3624

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)
=(904.888 / 3111.353) / (707.175 / 2775.96)
=0.29083424 / 0.25474971
=1.1416

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)
=((0 + 469.824) / 4349.747) / ((0 + 540.655) / 5883.484)
=0.1080118 / 0.09189368
=1.1754

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
=(726.789 - -5.002 - 784.76) / 4349.747
=-0.0122

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.

Monster Beverage Corp has a M-score of -2.12 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.

Monster Beverage Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.93340.51992.08311.64930.89461.13340.87741.13821.1334
GMI 1.010.99280.97310.99351.01530.99040.96060.90660.9414
AQI 5.4450.50040.92730.71531.350.78830.95953.33551.8233
SGI 1.49311.1431.10591.30621.20991.09011.09721.10451.12
DEPI 1.09611.0451.29070.9261.19751.11690.92660.92031.2622
SGAI 1.00471.384900.75321.30171.06870.89971.37580.8497
LVGI 0.74671.61580.42561.64051.4160.80440.82470.40141.5385
TATA 0.0167-0.11940.0697-0.03440.0494-0.0021-0.05840.00410.0039
M-score -0.13-3.82-0.71-2.06-2.17-2.31-2.75-1.22-2.05

Monster Beverage Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.87740.90270.86611.10491.13821.1171.10031.04541.13341.0908
GMI 0.96060.94440.9470.92040.90660.91590.90190.92630.94140.9452
AQI 0.95950.80662.84953.72533.33554.562.13341.91211.82331.7275
SGI 1.09721.11191.08811.11771.10451.08631.13571.09631.121.1208
DEPI 0.92660.92540.99650.97120.92030.89430.8261.08311.26221.3624
SGAI 0.89971.23661.291.29741.37580.79810.78070.82890.84971.1416
LVGI 0.82471.10380.37120.45260.40140.34881.45011.2391.53851.1754
TATA -0.0584-0.0819-0.0031-0.00140.00410.02990.01260.02020.0039-0.0122
M-score -2.75-3.04-1.66-1.10-1.22-0.53-1.93-1.97-2.05-2.12
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