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GuruFocus has detected 4 Warning Signs with Accenture PLC $ACN.
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Accenture PLC (NYSE:ACN)
Beneish M-Score
-2.59 (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.

Accenture PLC has a M-score of -2.59 suggests that the company is not a manipulator.

ACN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.71   Max: -1.39
Current: -2.59

-3.71
-1.39

During the past 13 years, the highest Beneish M-Score of Accenture PLC was -1.39. The lowest was -3.71. And the median was -2.73.


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 Accenture PLC 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 * 1.0481+0.528 * 1.0034+0.404 * 1.1408+0.892 * 1.0657+0.115 * 1.0158
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9699+4.679 * -0.0602-0.327 * 0.9963
=-2.59

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $4,452 Mil.
Revenue was 8762.182 + 9005.603 + 8965.58 + 8969.044 = $35,702 Mil.
Gross Profit was 2504.156 + 2730.032 + 2655.54 + 2689.552 = $10,579 Mil.
Total Current Assets was $10,764 Mil.
Total Assets was $20,079 Mil.
Property, Plant and Equipment(Net PPE) was $968 Mil.
Depreciation, Depletion and Amortization(DDA) was $750 Mil.
Selling, General & Admin. Expense(SGA) was $5,608 Mil.
Total Current Liabilities was $8,353 Mil.
Long-Term Debt was $25 Mil.
Net Income was 838.752 + 1004.476 + 1069.226 + 897.247 = $3,810 Mil.
Non Operating Income was -24.895 + -6.087 + 258.715 + -16.207 = $212 Mil.
Cash Flow from Operations was 154.703 + 1083.882 + 2055.439 + 1512.224 = $4,806 Mil.
Accounts Receivable was $3,986 Mil.
Revenue was 8397.053 + 8465.984 + 8364.511 + 8275.066 = $33,503 Mil.
Gross Profit was 2369.816 + 2562.519 + 2504.405 + 2524.905 = $9,962 Mil.
Total Current Assets was $10,679 Mil.
Total Assets was $18,148 Mil.
Property, Plant and Equipment(Net PPE) was $856 Mil.
Depreciation, Depletion and Amortization(DDA) was $682 Mil.
Selling, General & Admin. Expense(SGA) was $5,425 Mil.
Total Current Liabilities was $7,573 Mil.
Long-Term Debt was $27 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)
=(4452.252 / 35702.409) / (3986.141 / 33502.614)
=0.12470453 / 0.11898
=1.0481

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)
=(9961.645 / 33502.614) / (10579.28 / 35702.409)
=0.29733934 / 0.29631838
=1.0034

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 - (10764.002 + 968.433) / 20078.773) / (1 - (10678.8 + 856.403) / 18147.778)
=0.41567968 / 0.36437381
=1.1408

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
=35702.409 / 33502.614
=1.0657

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))
=(681.795 / (681.795 + 856.403)) / (749.665 / (749.665 + 968.433))
=0.44324268 / 0.43633425
=1.0158

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)
=(5607.527 / 35702.409) / (5425.214 / 33502.614)
=0.15706299 / 0.16193405
=0.9699

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)
=((24.546 + 8352.773) / 20078.773) / ((26.866 + 7573.179) / 18147.778)
=0.41722266 / 0.41878653
=0.9963

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
=(3809.701 - 211.526 - 4806.248) / 20078.773
=-0.0602

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.

Accenture PLC has a M-score of -2.59 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 local exchange's currency.

Accenture PLC Annual Data

Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14Aug15Aug16
DSRI 1.01281.03440.81340.75651.0780.87451.05991.10420.96371.0028
GMI 0.97280.99210.96140.94041.0241.01590.97761.01621.01951.0091
AQI 1.10141.07441.06340.97271.08550.89591.27121.161.26141.0118
SGI 1.17691.180.91530.99671.18441.08871.02071.04871.03261.0572
DEPI 0.86180.93270.91550.9931.05880.91441.00060.98420.98391.0315
SGAI 0.93510.99871.0391.09950.95910.95591.01860.96870.96330.9624
LVGI 1.06130.85240.92151.00530.9820.96820.99750.94051.0250.9234
TATA -0.1288-0.09-0.128-0.1009-0.075-0.1025-0.0002-0.0295-0.0546-0.0603
M-score -2.91-2.64-3.31-3.24-2.53-3.02-2.31-2.38-2.63-2.66

Accenture PLC Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.68020.64730.63310.96371.05431.05761.11111.00280.98961.0481
GMI 1.02861.03651.03171.01951.01311.00381.00571.00911.00691.0034
AQI 1.11971.02471.06071.26141.21091.17751.10651.01181.09191.1408
SGI 1.0621.07131.05411.03261.01911.0221.0421.05721.06961.0657
DEPI 0.93540.91290.95360.98391.02891.06151.02891.03151.0221.0158
SGAI 0.94170.92510.9440.96330.97870.99820.97140.96240.96290.9699
LVGI 0.97370.98981.01741.0251.01990.94610.93290.92340.95230.9963
TATA -0.0652-0.066-0.0692-0.0546-0.0436-0.0421-0.039-0.0603-0.0727-0.0602
M-score -2.95-3.01-3.05-2.63-2.52-2.51-2.45-2.66-2.70-2.59
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