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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.
During the past 13 years, the highest Beneish M-Score of Keurig Green Mountain Inc was -1.12. The lowest was -3.21. And the median was -2.42.
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 Keurig Green Mountain 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 * 1.2293||+||0.528 * 0.9633||+||0.404 * 0.7378||+||0.892 * 1.0802||+||0.115 * 1.0465|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9414||+||4.679 * -0.0233||-||0.327 * 1.0351|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $621 Mil.|
Revenue was 1195.567 + 1022.371 + 1103.072 + 1386.67 = $4,708 Mil.
Gross Profit was 449.789 + 444.592 + 457.432 + 464.047 = $1,816 Mil.
Total Current Assets was $2,446 Mil.
Total Assets was $4,797 Mil.
Property, Plant and Equipment(Net PPE) was $1,171 Mil.
Depreciation, Depletion and Amortization(DDA) was $258 Mil.
Selling, General & Admin. Expense(SGA) was $869 Mil.
Total Current Liabilities was $843 Mil.
Long-Term Debt was $257 Mil.
Net Income was 141.056 + 155.151 + 162.084 + 138.227 = $597 Mil.
Non Operating Income was -7.307 + 6.259 + -4.569 + -5.56 = $-11 Mil.
Cash Flow from Operations was -104.335 + 230.148 + 320.944 + 272.676 = $719 Mil.
|Accounts Receivable was $468 Mil.
Revenue was 1047.177 + 967.072 + 1004.792 + 1339.059 = $4,358 Mil.
Gross Profit was 377.459 + 407.618 + 415.146 + 419.163 = $1,619 Mil.
Total Current Assets was $1,521 Mil.
Total Assets was $3,762 Mil.
Property, Plant and Equipment(Net PPE) was $986 Mil.
Depreciation, Depletion and Amortization(DDA) was $229 Mil.
Selling, General & Admin. Expense(SGA) was $854 Mil.
Total Current Liabilities was $597 Mil.
Long-Term Debt was $236 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(621.451 / 4707.68)||/||(467.976 / 4358.1)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(444.592 / 4358.1)||/||(449.789 / 4707.68)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2445.52 + 1171.425) / 4797.307)||/||(1 - (1521.492 + 985.563) / 3761.548)|
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.
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))|
|=||(229.193 / (229.193 + 985.563))||/||(257.639 / (257.639 + 1171.425))|
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)|
|=||(868.619 / 4707.68)||/||(854.159 / 4358.1)|
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)|
|=||((257.177 + 842.988) / 4797.307)||/||((236.282 + 597.063) / 3761.548)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(596.518 - -11.177||-||719.433)||/||4797.307|
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.
Keurig Green Mountain Inc has a M-score of -2.43 suggests that the company will not be a manipulator.
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
Keurig Green Mountain Inc Annual Data
Keurig Green Mountain Inc Quarterly Data