Avient 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 Avient 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 * 1.3823 | + | 0.528 * 0.949 | + | 0.404 * 1.2998 | + | 0.892 * 1.1325 | + | 0.115 * 1.2131 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0499 | + | 4.679 * -0.0235 | - | 0.327 * 0.9314 |
| = | -1.99 |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
| This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $517 Mil.
Revenue was 997 + 924.5 + 609.1 + 711.5 = $3,242 Mil.
Gross Profit was 252.9 + 210.2 + 149.7 + 171.5 = $784 Mil.
Total Current Assets was $1,602 Mil.
Total Assets was $4,871 Mil.
Property, Plant and Equipment(Net PPE) was $776 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General, & Admin. Expense(SGA) was $595 Mil.
Total Current Liabilities was $801 Mil.
Long-Term Debt & Capital Lease Obligation was $1,910 Mil.
Net Income was 74.3 + 1.7 + 22.8 + 32.8 = $132 Mil.
Non Operating Income was 11.7 + 1.5 + 9.5 + 1.6 = $24 Mil.
Cash Flow from Operations was 152.9 + -7.3 + 88.8 + -12.8 = $222 Mil.
|
Accounts Receivable was $330 Mil.
Revenue was 658.6 + 705.3 + 748.2 + 750.6 = $2,863 Mil.
Gross Profit was 153.3 + 160.5 + 175.3 + 168.1 = $657 Mil.
Total Current Assets was $1,513 Mil.
Total Assets was $3,273 Mil.
Property, Plant and Equipment(Net PPE) was $471 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General, & Admin. Expense(SGA) was $500 Mil.
Total Current Liabilities was $703 Mil.
Long-Term Debt & Capital Lease Obligation was $1,254 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) |
| = | (516.6 / 3242.1) | / | (330 / 2862.7) |
| = | 0.15934117 | / | 0.11527579 |
| | = | 1.3823 |
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) |
| = | (657.2 / 2862.7) | / | (784.3 / 3242.1) |
| = | 0.22957348 | / | 0.24191111 |
| | = | 0.949 |
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 - (1602.1 + 775.8) / 4870.5) | / | (1 - (1513.3 + 471.2) / 3273.3) |
| = | 0.51177497 | / | 0.3937311 |
| | = | 1.2998 |
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 |
| = | 3242.1 | / | 2862.7 |
| | = | 1.1325 |
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)) |
| = | (87.5 / (87.5 + 471.2)) | / | (115 / (115 + 775.8)) |
| = | 0.15661357 | / | 0.12909744 |
| | = | 1.2131 |
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) |
| = | (595 / 3242.1) | / | (500.4 / 2862.7) |
| = | 0.18352303 | / | 0.17480001 |
| | = | 1.0499 |
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) |
| = | ((1910 + 801) / 4870.5) | / | ((1253.7 + 702.5) / 3273.3) |
| = | 0.55661636 | / | 0.59762319 |
| | = | 0.9314 |
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 |
| = | (131.6 - 24.3 | - | 221.6) | / | 4870.5 |
| | = | -0.0235 |
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.
Avient has a M-score of -1.99 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
0.65(1.35%) Volume: 357,470 4:00PM EDT
Email Alerts
Stock PDF
RSS
Website
Filings
Manual of Stocks™ Web APP
NYSE:AVNT has been successfully added to your 
