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GuruFocus has detected 8 Warning Signs with Apple Inc $AAPL.
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Apple Inc (NAS:AAPL)
Beneish M-Score
-2.69 (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.

Apple Inc has a M-score of -2.69 suggests that the company is not a manipulator.

AAPL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.54   Max: -1.04
Current: -2.69

-4.54
-1.04

During the past 13 years, the highest Beneish M-Score of Apple Inc was -1.04. The lowest was -4.54. And the median was -2.64.


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 Apple 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 * 1.1692+0.528 * 1.0419+0.404 * 0.9154+0.892 * 0.9282+0.115 * 1.2055
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0563+4.679 * -0.0586-0.327 * 1.0802
=-2.69

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $14,057 Mil.
Revenue was 78351 + 46852 + 42358 + 50557 = $218,118 Mil.
Gross Profit was 30176 + 17813 + 16106 + 19921 = $84,016 Mil.
Total Current Assets was $103,332 Mil.
Total Assets was $331,141 Mil.
Property, Plant and Equipment(Net PPE) was $26,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,538 Mil.
Selling, General & Admin. Expense(SGA) was $14,292 Mil.
Total Current Liabilities was $84,130 Mil.
Long-Term Debt was $73,557 Mil.
Net Income was 17891 + 9014 + 7796 + 10516 = $45,217 Mil.
Non Operating Income was 122 + -159 + -263 + -510 = $-810 Mil.
Cash Flow from Operations was 27056 + 16126 + 10634 + 11601 = $65,417 Mil.
Accounts Receivable was $12,953 Mil.
Revenue was 75872 + 51501 + 49605 + 58010 = $234,988 Mil.
Gross Profit was 30423 + 20548 + 19681 + 23656 = $94,308 Mil.
Total Current Assets was $76,219 Mil.
Total Assets was $293,284 Mil.
Property, Plant and Equipment(Net PPE) was $22,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,636 Mil.
Selling, General & Admin. Expense(SGA) was $14,577 Mil.
Total Current Liabilities was $76,092 Mil.
Long-Term Debt was $53,204 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)
=(14057 / 218118) / (12953 / 234988)
=0.06444677 / 0.05512196
=1.1692

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)
=(94308 / 234988) / (84016 / 218118)
=0.40133113 / 0.385186
=1.0419

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 - (103332 + 26510) / 331141) / (1 - (76219 + 22300) / 293284)
=0.60789513 / 0.66408328
=0.9154

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
=218118 / 234988
=0.9282

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))
=(11636 / (11636 + 22300)) / (10538 / (10538 + 26510))
=0.34288072 / 0.28444181
=1.2055

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)
=(14292 / 218118) / (14577 / 234988)
=0.06552417 / 0.06203295
=1.0563

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)
=((73557 + 84130) / 331141) / ((53204 + 76092) / 293284)
=0.47619292 / 0.44085596
=1.0802

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
=(45217 - -810 - 65417) / 331141
=-0.0586

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.

Apple Inc has a M-score of -2.69 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.

Apple Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.02750.96991.21261.07840.58711.4081.09771.2460.75481.0134
GMI 0.87380.94230.87691.01940.97280.92271.1660.9750.96331.0252
AQI 0.74791.66762.66661.39751.431.06990.96751.08780.99890.9497
SGI 1.27251.52541.14441.52021.65961.44581.0921.06951.27860.9227
DEPI 1.01280.87760.84451.1230.9371.0810.60471.04030.83331.1919
SGAI 0.95710.83210.9640.87470.82990.91380.98781.03540.93451.0736
LVGI 0.97540.85610.77121.13790.8720.91081.33771.36151.1571.0407
TATA -0.1016-0.0952-0.0388-0.0589-0.0988-0.0486-0.0788-0.0853-0.0929-0.0589
M-score -2.84-2.18-1.67-2.06-2.51-1.89-2.76-2.69-2.97-2.82

Apple Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.2461.02470.93280.76330.75480.65911.04571.15041.01341.1692
GMI 0.9750.9530.95520.96690.96330.97810.99631.00551.02521.0419
AQI 1.08781.05091.13491.07670.99891.10010.9610.92020.94970.9154
SGI 1.06951.14831.20521.25931.27861.17611.07240.9820.92270.9282
DEPI 1.04031.10151.07730.94680.83330.84920.92231.06631.19191.2055
SGAI 1.03540.98890.95930.9510.93450.98841.03751.06531.07361.0563
LVGI 1.36151.291.2951.22041.1571.0881.19191.11371.04071.0802
TATA -0.0853-0.0978-0.106-0.1078-0.0929-0.0698-0.0516-0.0464-0.0589-0.0586
M-score -2.69-2.87-2.90-3.03-2.97-2.98-2.71-2.64-2.82-2.69
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