Switch to:
ABB Ltd (NYSE:ABB)
Beneish M-Score
-2.56 (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.

ABB Ltd has a M-score of -2.56 suggests that the company is not a manipulator.

ABB' s 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.09
Current: -2.56

-2.96
-2.09

During the past 13 years, the highest Beneish M-Score of ABB Ltd was -2.09. The lowest was -2.96. And the median was -2.51.


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 ABB Ltd 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 * 0.987+0.528 * 1.0076+0.404 * 0.9892+0.892 * 1.0364+0.115 * 0.9971
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.009+4.679 * -0.0239-0.327 * 0.9655
=-2.56

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $12,215 Mil.
Revenue was 9471 + 11373 + 10535 + 10225 = $41,604 Mil.
Gross Profit was 2727 + 2942 + 3174 + 3025 = $11,868 Mil.
Total Current Assets was $27,510 Mil.
Total Assets was $48,793 Mil.
Property, Plant and Equipment(Net PPE) was $6,171 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,330 Mil.
Selling, General & Admin. Expense(SGA) was $6,152 Mil.
Total Current Liabilities was $16,993 Mil.
Long-Term Debt was $7,612 Mil.
Net Income was 544 + 525 + 835 + 763 = $2,667 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -45 + 2092 + 1241 + 543 = $3,831 Mil.
Accounts Receivable was $11,941 Mil.
Revenue was 9715 + 11021 + 9745 + 9663 = $40,144 Mil.
Gross Profit was 2851 + 2923 + 2923 + 2842 = $11,539 Mil.
Total Current Assets was $26,946 Mil.
Total Assets was $47,701 Mil.
Property, Plant and Equipment(Net PPE) was $5,820 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,250 Mil.
Selling, General & Admin. Expense(SGA) was $5,883 Mil.
Total Current Liabilities was $17,485 Mil.
Long-Term Debt was $7,430 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)
=(12215 / 41604) / (11941 / 40144)
=0.29360158 / 0.29745417
=0.987

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)
=(2942 / 40144) / (2727 / 41604)
=0.28744022 / 0.28526103
=1.0076

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 - (27510 + 6171) / 48793) / (1 - (26946 + 5820) / 47701)
=0.30971656 / 0.31309616
=0.9892

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
=41604 / 40144
=1.0364

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))
=(1250 / (1250 + 5820)) / (1330 / (1330 + 6171))
=0.17680339 / 0.17730969
=0.9971

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)
=(6152 / 41604) / (5883 / 40144)
=0.1478704 / 0.14654743
=1.009

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)
=((7612 + 16993) / 48793) / ((7430 + 17485) / 47701)
=0.50427315 / 0.52231609
=0.9655

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
=(2667 - 0 - 3831) / 48793
=-0.0239

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.

ABB Ltd has a M-score of -2.56 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 own currency.

ABB Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.04830.97960.92311.04270.90051.12251.06180.89850.68310.9368
GMI 0.90380.93630.89810.94260.98071.06840.97231.00231.04051.0094
AQI 1.08791.02630.76440.77991.06170.98981.1621.51931.11691.0388
SGI 0.9911.04041.11051.25351.19630.91070.99351.20261.03541.0639
DEPI 0.96550.92681.12031.08340.99951.12960.99840.82531.01420.9525
SGAI 0.96490.96191.03050.91740.97820.8471.03430.96811.03460.9952
LVGI 0.96060.95410.88540.86141.01240.88891.02111.01351.08220.9338
TATA -0.0484-0.0158-0.02840.0205-0.0254-0.0324-0.0451-0.0112-0.0219-0.018
M-score -2.67-2.55-2.69-2.17-2.50-2.49-2.60-2.25-2.81-2.53

ABB Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.89850.91190.93561.01021.03771.02631.03131.01820.61670.987
GMI 1.00231.00981.03221.02741.04051.04391.02631.02031.00941.0076
AQI 1.51930.98011.32821.24131.11691.21020.93740.97621.03880.9892
SGI 1.20261.16451.09421.06251.03541.04281.05791.06711.06391.0364
DEPI 0.82530.8270.88550.99561.01420.93710.89740.92040.95250.9971
SGAI 0.96810.98271.00831.01021.03461.03851.00941.0010.99521.009
LVGI 1.01351.05151.0681.02671.08221.02550.96160.96790.93380.9655
TATA -0.0103-0.0028-0.0014-0.0011-0.02-0.0168-0.0141-0.0219-0.018-0.0239
M-score -2.25-2.46-2.35-2.32-2.47-2.41-2.48-2.50-2.82-2.56
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide