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ABB, Ltd. (NYSE:ABB)
Beneish M-Score
-2.82 (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 -2.82 suggests that the company is not a manipulator.

ABB' s 10-Year Beneish M-Score Range
Min: -2.82   Max: -2.17
Current: -2.82

-2.82
-2.17

During the past 13 years, the highest Beneish M-Score of ABB, Ltd. was -2.17. The lowest was -2.82. And the median was -2.54.


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 * 0.6167+0.528 * 1.0094+0.404 * 1.0388+0.892 * 1.0639+0.115 * 0.9525
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9952+4.679 * -0.018-0.327 * 0.9338
=-2.82

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $7,594 Mil.
Revenue was 11373 + 10535 + 10225 + 9715 = $41,848 Mil.
Gross Profit was 2942 + 3174 + 3025 + 2851 = $11,992 Mil.
Total Current Assets was $26,425 Mil.
Total Assets was $48,064 Mil.
Property, Plant and Equipment(Net PPE) was $6,254 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,318 Mil.
Selling, General & Admin. Expense(SGA) was $6,094 Mil.
Total Current Liabilities was $16,675 Mil.
Long-Term Debt was $7,570 Mil.
Net Income was 525 + 835 + 763 + 664 = $2,787 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2092 + 1241 + 543 + -223 = $3,653 Mil.
Accounts Receivable was $11,575 Mil.
Revenue was 11021 + 9745 + 9663 + 8907 = $39,336 Mil.
Gross Profit was 2923 + 2923 + 2842 + 2690 = $11,378 Mil.
Total Current Assets was $28,002 Mil.
Total Assets was $49,070 Mil.
Property, Plant and Equipment(Net PPE) was $5,947 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,182 Mil.
Selling, General & Admin. Expense(SGA) was $5,756 Mil.
Total Current Liabilities was $18,974 Mil.
Long-Term Debt was $7,534 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)
=(7594 / 41848) / (11575 / 39336)
=0.18146626 / 0.29425971
=0.6167

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)
=(3174 / 39336) / (2942 / 41848)
=0.28925158 / 0.28656089
=1.0094

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 - (26425 + 6254) / 48064) / (1 - (28002 + 5947) / 49070)
=0.32009404 / 0.30815162
=1.0388

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
=41848 / 39336
=1.0639

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))
=(1182 / (1182 + 5947)) / (1318 / (1318 + 6254))
=0.16580166 / 0.17406233
=0.9525

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)
=(6094 / 41848) / (5756 / 39336)
=0.14562225 / 0.14632906
=0.9952

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)
=((7570 + 16675) / 48064) / ((7534 + 18974) / 49070)
=0.50443159 / 0.54020787
=0.9338

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
=(2787 - 0 - 3653) / 48064
=-0.018

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 -2.82 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.94070.89850.91190.93561.01021.03771.02631.03131.01820.6167
GMI 0.99381.00231.00981.03221.02741.04051.04391.02631.02031.0094
AQI 1.38061.51930.98011.32821.24131.11691.21020.93740.97621.0388
SGI 1.17411.20261.16451.09421.06251.03541.04281.05791.06711.0639
DEPI 0.89180.82530.8270.88550.99561.01420.93710.89740.92040.9525
SGAI 1.16160.96810.98271.00831.01021.03461.03851.00941.0010.9952
LVGI 1.06071.01351.05151.0681.02671.08221.02550.96160.96790.9338
TATA -0.0164-0.0103-0.0028-0.0014-0.0011-0.02-0.0168-0.0141-0.0219-0.018
M-score -2.37-2.25-2.46-2.35-2.32-2.47-2.41-2.48-2.50-2.82
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