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GuruFocus has detected 3 Warning Signs with Vulcan Materials Co $VMC.
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Vulcan Materials Co (NYSE:VMC)
Beneish M-Score
-2.60 (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.

Vulcan Materials Co has a M-score of -2.60 suggests that the company is not a manipulator.

VMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12   Max: -1.81
Current: -2.6

-3.12
-1.81

During the past 13 years, the highest Beneish M-Score of Vulcan Materials Co was -1.81. The lowest was -3.12. And the median was -2.71.


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 Vulcan Materials Co 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 * 1.0333+0.528 * 0.9694+0.404 * 0.9648+0.892 * 1.0225+0.115 * 1.0399
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0575+4.679 * -0.0238-0.327 * 1.0852
=-2.60

* 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 $469 Mil.
Revenue was 787.328 + 872.974 + 1008.14 + 956.825 = $3,625 Mil.
Gross Profit was 159.979 + 239.705 + 304.209 + 292.184 = $996 Mil.
Total Current Assets was $1,158 Mil.
Total Assets was $8,744 Mil.
Property, Plant and Equipment(Net PPE) was $3,452 Mil.
Depreciation, Depletion and Amortization(DDA) was $287 Mil.
Selling, General & Admin. Expense(SGA) was $321 Mil.
Total Current Liabilities was $361 Mil.
Long-Term Debt was $2,329 Mil.
Net Income was 44.921 + 137.052 + 139.765 + 123.75 = $445 Mil.
Non Operating Income was 2.024 + 0.619 + 0.99 + 0.029 = $4 Mil.
Cash Flow from Operations was 94.152 + 299.14 + 242.915 + 13.805 = $650 Mil.
Accounts Receivable was $444 Mil.
Revenue was 754.728 + 857.285 + 1038.46 + 895.143 = $3,546 Mil.
Gross Profit was 164.718 + 253.929 + 291.29 + 234.449 = $944 Mil.
Total Current Assets was $1,008 Mil.
Total Assets was $8,247 Mil.
Property, Plant and Equipment(Net PPE) was $3,198 Mil.
Depreciation, Depletion and Amortization(DDA) was $278 Mil.
Selling, General & Admin. Expense(SGA) was $297 Mil.
Total Current Liabilities was $356 Mil.
Long-Term Debt was $1,981 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)
=(468.833 / 3625.267) / (443.763 / 3545.616)
=0.12932372 / 0.12515822
=1.0333

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)
=(944.386 / 3545.616) / (996.077 / 3625.267)
=0.26635315 / 0.27475962
=0.9694

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 - (1157.762 + 3451.821) / 8744.324) / (1 - (1007.503 + 3197.827) / 8247.025)
=0.47284856 / 0.49007915
=0.9648

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
=3625.267 / 3545.616
=1.0225

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))
=(277.506 / (277.506 + 3197.827)) / (287.097 / (287.097 + 3451.821))
=0.07985019 / 0.07678612
=1.0399

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)
=(320.638 / 3625.267) / (296.549 / 3545.616)
=0.08844535 / 0.08363822
=1.0575

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)
=((2329.248 + 360.898) / 8744.324) / ((1981.425 + 356.485) / 8247.025)
=0.30764482 / 0.28348526
=1.0852

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
=(445.488 - 3.662 - 650.012) / 8744.324
=-0.0238

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.

Vulcan Materials Co has a M-score of -2.60 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.

Vulcan Materials Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.08240.70471.11511.24670.93930.92671.13391.01860.92980.9554
GMI 0.97591.39171.23871.41041.06170.85080.84450.78510.78310.8995
AQI 1.92780.93181.05961.02631.01731.02150.98721.04080.97140.9829
SGI 0.99561.09730.73680.95111.00221.00111.07921.08071.14291.0498
DEPI 1.54860.81490.92610.97170.9941.00641.12051.01741.04130.9969
SGAI 1.00391.07811.27411.07080.89111.17260.70.97120.92171.046
LVGI 1.92270.94260.81471.0351.03930.97190.9370.83240.98870.9888
TATA -0.0282-0.0482-0.0502-0.0362-0.0119-0.0435-0.0411-0.0074-0.0357-0.0242
M-score -2.42-2.73-2.69-2.27-2.54-2.84-2.48-2.46-2.69-2.65

Vulcan Materials Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.01860.97711.02331.01360.92981.03220.95020.89290.95541.0333
GMI 0.78510.76320.77480.78720.78310.77690.78840.82080.89950.9694
AQI 1.04080.9751.00250.9720.97141.00810.98650.99490.98290.9648
SGI 1.08071.0871.10341.13721.14291.16211.14331.07741.04981.0225
DEPI 1.01741.14361.1211.04791.04131.03161.01611.00510.99691.0399
SGAI 0.97120.96250.94380.93270.92170.9350.98781.04461.0461.0575
LVGI 0.83241.04370.99320.98790.98870.91080.95360.97550.98881.0852
TATA -0.0074-0.021-0.023-0.0263-0.0357-0.0345-0.0215-0.023-0.0242-0.0238
M-score -2.46-2.65-2.57-2.57-2.69-2.54-2.60-2.71-2.65-2.60
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