Fonterra Co-operative Group (NZSE:FCG) Beneish M-Score : -3.05 (As of Jun. 24, 2024)

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What is Fonterra Co-operative Group Beneish M-Score?

The zones of discrimination for M-Score is as such:

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.

Good Sign:

Beneish M-Score -3.05 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Fonterra Co-operative Group's Beneish M-Score or its related term are showing as below:

NZSE:FCG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.53 Med: -2.73 Max: -1.92
Current: -3.05

During the past 13 years, the highest Beneish M-Score of Fonterra Co-operative Group was -1.92. The lowest was -3.53. And the median was -2.73.

Fonterra Co-operative Group Beneish M-Score Historical Data

The historical data trend for Fonterra Co-operative Group's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Fonterra Co-operative Group Beneish M-Score Chart

Fonterra Co-operative Group Annual Data

Trend

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Jul23

Beneish M-Score

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-3.16

-2.81

-2.65

-1.92

-3.05

Fonterra Co-operative Group Semi-Annual Data
	Jan14	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23
Beneish M-Score	Get a 7-Day Free Trial															-2.65	-	-1.92	-	-3.05

Competitive Comparison of Fonterra Co-operative Group's Beneish M-Score

For the Packaged Foods subindustry, Fonterra Co-operative Group's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

Fonterra Co-operative Group's Beneish M-Score Distribution in the Consumer Packaged Goods Industry

For the Consumer Packaged Goods industry and Consumer Defensive sector, Fonterra Co-operative Group's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Fonterra Co-operative Group's Beneish M-Score falls into.

Fonterra Co-operative Group 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 Fonterra Co-operative Group for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.8759

0.528 * 0.8048

0.404 * 0.7916

0.892 * 1.1223

0.115 * 0.9464

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9372

4.679 * -0.086286

0.327 * 0.9212

-3.05

This Year (Jul23) TTM:

Last Year (Jul22) TTM:

Total Receivables was NZ$2,371 Mil.
Revenue was NZ$24,580 Mil.
Gross Profit was NZ$4,655 Mil.
Total Current Assets was NZ$9,495 Mil.
Total Assets was NZ$18,601 Mil.
Property, Plant and Equipment(Net PPE) was NZ$6,343 Mil.
Depreciation, Depletion and Amortization(DDA) was NZ$662 Mil.
Selling, General, & Admin. Expense(SGA) was NZ$649 Mil.
Total Current Liabilities was NZ$7,261 Mil.
Long-Term Debt & Capital Lease Obligation was NZ$3,156 Mil.
Net Income was NZ$1,577 Mil.
Gross Profit was NZ$0 Mil.
Cash Flow from Operations was NZ$3,182 Mil.

Total Receivables was NZ$2,412 Mil.
Revenue was NZ$21,901 Mil.
Gross Profit was NZ$3,338 Mil.
Total Current Assets was NZ$8,792 Mil.
Total Assets was NZ$18,781 Mil.
Property, Plant and Equipment(Net PPE) was NZ$6,465 Mil.
Depreciation, Depletion and Amortization(DDA) was NZ$635 Mil.
Selling, General, & Admin. Expense(SGA) was NZ$617 Mil.
Total Current Liabilities was NZ$6,518 Mil.
Long-Term Debt & Capital Lease Obligation was NZ$4,900 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(2371 / 24580)	/	(2412 / 21901)
	=	0.096461	/	0.110132
	=	0.8759

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)
	=	(3338 / 21901)	/	(4655 / 24580)
	=	0.152413	/	0.189382
	=	0.8048

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 - (9495 + 6343) / 18601)	/	(1 - (8792 + 6465) / 18781)
	=	0.14854	/	0.187636
	=	0.7916

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
	=	24580	/	21901
	=	1.1223

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))
	=	(635 / (635 + 6465))	/	(662 / (662 + 6343))
	=	0.089437	/	0.094504
	=	0.9464

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)
	=	(649 / 24580)	/	(617 / 21901)
	=	0.026404	/	0.028172
	=	0.9372

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)
	=	((3156 + 7261) / 18601)	/	((4900 + 6518) / 18781)
	=	0.560024	/	0.607955
	=	0.9212

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
	=	(1577 - 0	-	3182)	/	18601
	=	-0.086286

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.

Fonterra Co-operative Group has a M-score of -3.05 suggests that the company is unlikely to be a manipulator.

Fonterra Co-operative Group Beneish M-Score Related Terms

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Fonterra Co-operative Group (NZSE:FCG) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Fonterra Co-operative Group Ltd (NZSE:FCG) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

109 Fanshawe Street, Auckland Central, Auckland, NZL, 1010

Website

https://www.fonterra.com

Fonterra Co-operative Group Ltd operates predominantly in the international dairy industry. The company is involved in the collection, manufacture, and sale of milk and milk-derived products through its ingredients, Consumer and Foodservice channels. The company's reportable segments are Global Markets, Greater China, and Core Operations and the majority of the revenue is generated from its core operations segment. Its primary geographic markets are China, the Rest of Asia, Australia, New Zealand, the United States, Latin America, and the Rest of the world.