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AbbVie Inc (NYSE:ABBV)
Beneish M-Score
-2.00 (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.

AbbVie Inc has a M-score of -2.00 signals that the company is a manipulator.

ABBV' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -2
Current: -2

-2.93
-2

During the past 7 years, the highest Beneish M-Score of AbbVie Inc was -2.00. The lowest was -2.93. And the median was -2.71.


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 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 * 1.1058+0.528 * 0.969+0.404 * 1.9808+0.892 * 1.1452+0.115 * 0.9776
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.722+4.679 * -0.0412-0.327 * 0.9491
=-2.00

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $4,730 Mil.
Revenue was 6400 + 5944 + 5475 + 5040 = $22,859 Mil.
Gross Profit was 4925 + 4777 + 4559 + 4098 = $18,359 Mil.
Total Current Assets was $16,314 Mil.
Total Assets was $53,050 Mil.
Property, Plant and Equipment(Net PPE) was $2,565 Mil.
Depreciation, Depletion and Amortization(DDA) was $836 Mil.
Selling, General & Admin. Expense(SGA) was $6,387 Mil.
Total Current Liabilities was $10,894 Mil.
Long-Term Debt was $29,240 Mil.
Net Income was 1517 + 1239 + 1366 + 1022 = $5,144 Mil.
Non Operating Income was 10 + -41 + -10 + -165 = $-206 Mil.
Cash Flow from Operations was 1963 + 2155 + 1832 + 1585 = $7,535 Mil.
Accounts Receivable was $3,735 Mil.
Revenue was 5452 + 5019 + 4926 + 4563 = $19,960 Mil.
Gross Profit was 4333 + 3925 + 3813 + 3463 = $15,534 Mil.
Total Current Assets was $16,081 Mil.
Total Assets was $27,513 Mil.
Property, Plant and Equipment(Net PPE) was $2,485 Mil.
Depreciation, Depletion and Amortization(DDA) was $786 Mil.
Selling, General & Admin. Expense(SGA) was $7,724 Mil.
Total Current Liabilities was $11,393 Mil.
Long-Term Debt was $10,538 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)
=(4730 / 22859) / (3735 / 19960)
=0.20692069 / 0.18712425
=1.1058

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)
=(4777 / 19960) / (4925 / 22859)
=0.77825651 / 0.80314099
=0.969

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 - (16314 + 2565) / 53050) / (1 - (16081 + 2485) / 27513)
=0.64412818 / 0.32519173
=1.9808

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
=22859 / 19960
=1.1452

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))
=(786 / (786 + 2485)) / (836 / (836 + 2565))
=0.24029349 / 0.24581006
=0.9776

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)
=(6387 / 22859) / (7724 / 19960)
=0.27940855 / 0.38697395
=0.722

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)
=((29240 + 10894) / 53050) / ((10538 + 11393) / 27513)
=0.75653157 / 0.79711409
=0.9491

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
=(5144 - -206 - 7535) / 53050
=-0.0412

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 -2.00 signals that the company is likely to 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.

AbbVie Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.06871.09310.73211.1058
GMI 0.97260.99810.97170.969
AQI 0.67840.89011.04891.9808
SGI 1.05371.02231.06231.1452
DEPI 1.11.20581.16840.9776
SGAI 0.80341.04941.35860.722
LVGI 2.60950.91481.09930.9491
TATA -0.0393-0.0714-0.0409-0.0412
M-score -3.18-2.71-2.93-2.00

AbbVie Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.09311.04030.98741.01250.73210.88341.05151.02521.1058
GMI 0.99810.99340.99830.98990.97170.96310.94520.94480.969
AQI 0.89010.84890.84880.88821.04891.05722.09672.10671.9808
SGI 1.02231.02631.02791.03891.06231.07431.08971.11681.1452
DEPI 1.20581.19661.20011.25881.16841.1571.14911.0610.9776
SGAI 1.04941.06751.04061.0561.35861.34071.35421.22710.722
LVGI 0.91480.91410.94530.98611.09931.13230.99560.98780.9491
TATA -0.0714-0.0527-0.0398-0.0518-0.0409-0.0703-0.0321-0.0268-0.0412
M-score -2.71-2.69-2.68-2.70-2.93-2.93-2.13-2.09-2.00
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