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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.
AbbVie Inc has a M-score of -2.75 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of AbbVie Inc was -2.68. The lowest was -2.75. And the median was -2.70.
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 * 1.0125||+||0.528 * 0.9899||+||0.404 * 0.8882||+||0.892 * 1.0389||+||0.115 * 1.2588|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.056||+||4.679 * -0.0611||-||0.327 * 0.9861|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $3,995 Mil.|
Revenue was 5019 + 4926 + 4563 + 5111 = $19,619 Mil.
Gross Profit was 3925 + 3813 + 3463 + 3829 = $15,030 Mil.
Total Current Assets was $17,555 Mil.
Total Assets was $28,454 Mil.
Property, Plant and Equipment(Net PPE) was $2,432 Mil.
Depreciation, Depletion and Amortization(DDA) was $793 Mil.
Selling, General & Admin. Expense(SGA) was $5,831 Mil.
Total Current Liabilities was $6,635 Mil.
Long-Term Debt was $14,469 Mil.
Net Income was 506 + 1098 + 980 + 1128 = $3,712 Mil.
Non Operating Income was 145 + 13 + 0 + -80 = $78 Mil.
Cash Flow from Operations was 1786 + 1717 + 624 + 1245 = $5,372 Mil.
|Accounts Receivable was $3,798 Mil.
Revenue was 4658 + 4692 + 4329 + 5206 = $18,885 Mil.
Gross Profit was 3566 + 3638 + 3176 + 3941 = $14,321 Mil.
Total Current Assets was $16,543 Mil.
Total Assets was $28,252 Mil.
Property, Plant and Equipment(Net PPE) was $2,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,006 Mil.
Selling, General & Admin. Expense(SGA) was $5,315 Mil.
Total Current Liabilities was $6,875 Mil.
Long-Term Debt was $14,375 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)|
|=||(3995 / 19619)||/||(3798 / 18885)|
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)|
|=||(3813 / 18885)||/||(3925 / 19619)|
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 - (17555 + 2432) / 28454)||/||(1 - (16543 + 2244) / 28252)|
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))|
|=||(1006 / (1006 + 2244))||/||(793 / (793 + 2432))|
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)|
|=||(5831 / 19619)||/||(5315 / 18885)|
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)|
|=||((14469 + 6635) / 28454)||/||((14375 + 6875) / 28252)|
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|
|=||(3712 - 78||-||5372)||/||28454|
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 -2.75 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