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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 7 years, the highest Beneish M-Score of AbbVie Inc was -2.09. The lowest was -2.93. And the median was -2.52.
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 AbbVie 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 * 0.98||+||0.528 * 1.0318||+||0.404 * 1.1115||+||0.892 * 1.1795||+||0.115 * 0.7906|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6304||+||4.679 * -0.0304||-||0.327 * 0.973|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $5,048 Mil.|
Revenue was 6452 + 5958 + 6400 + 5944 = $24,754 Mil.
Gross Profit was 5047 + 4589 + 4925 + 4777 = $19,338 Mil.
Total Current Assets was $16,791 Mil.
Total Assets was $67,211 Mil.
Property, Plant and Equipment(Net PPE) was $2,618 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,045 Mil.
Selling, General & Admin. Expense(SGA) was $6,032 Mil.
Total Current Liabilities was $9,272 Mil.
Long-Term Debt was $37,328 Mil.
Net Income was 1610 + 1354 + 1517 + 1239 = $5,720 Mil.
Non Operating Income was -66 + -302 + 10 + -41 = $-399 Mil.
Cash Flow from Operations was 1918 + 2128 + 1963 + 2155 = $8,164 Mil.
|Accounts Receivable was $4,367 Mil.
Revenue was 5475 + 5040 + 5452 + 5019 = $20,986 Mil.
Gross Profit was 4559 + 4098 + 4333 + 3925 = $16,915 Mil.
Total Current Assets was $16,877 Mil.
Total Assets was $53,855 Mil.
Property, Plant and Equipment(Net PPE) was $2,517 Mil.
Depreciation, Depletion and Amortization(DDA) was $733 Mil.
Selling, General & Admin. Expense(SGA) was $8,112 Mil.
Total Current Liabilities was $11,258 Mil.
Long-Term Debt was $27,116 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)|
|=||(5048 / 24754)||/||(4367 / 20986)|
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)|
|=||(16915 / 20986)||/||(19338 / 24754)|
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 - (16791 + 2618) / 67211)||/||(1 - (16877 + 2517) / 53855)|
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))|
|=||(733 / (733 + 2517))||/||(1045 / (1045 + 2618))|
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)|
|=||(6032 / 24754)||/||(8112 / 20986)|
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)|
|=||((37328 + 9272) / 67211)||/||((27116 + 11258) / 53855)|
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|
|=||(5720 - -399||-||8164)||/||67211|
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.
AbbVie Inc has a M-score of -2.37 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
AbbVie Inc Annual Data
AbbVie Inc Quarterly Data