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GuruFocus has detected 3 Warning Signs with Accenture PLC $ACN.
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Accenture PLC (NYSE:ACN)
Beneish M-Score
-2.70 (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 -2.70 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: -2.7

-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 -2.75.


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 * 0.9896+0.528 * 1.0069+0.404 * 1.0919+0.892 * 1.0696+0.115 * 1.022
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9629+4.679 * -0.0727-0.327 * 0.9523
=-2.70

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

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $4,299 Mil.
Revenue was 9005.603 + 8965.58 + 8969.044 + 8397.053 = $35,337 Mil.
Gross Profit was 2730.032 + 2655.54 + 2689.552 + 2369.816 = $10,445 Mil.
Total Current Assets was $11,368 Mil.
Total Assets was $20,444 Mil.
Property, Plant and Equipment(Net PPE) was $929 Mil.
Depreciation, Depletion and Amortization(DDA) was $735 Mil.
Selling, General & Admin. Expense(SGA) was $5,524 Mil.
Total Current Liabilities was $9,170 Mil.
Long-Term Debt was $25 Mil.
Net Income was 1004.476 + 1069.226 + 897.247 + 1326.52 = $4,297 Mil.
Non Operating Income was -6.087 + 258.715 + -16.207 + 532.364 = $769 Mil.
Cash Flow from Operations was 1083.882 + 2055.439 + 1591.025 + 285.394 = $5,016 Mil.
Accounts Receivable was $4,061 Mil.
Revenue was 8465.984 + 8364.511 + 8275.066 + 7931.59 = $33,037 Mil.
Gross Profit was 2562.519 + 2504.405 + 2524.905 + 2240.639 = $9,832 Mil.
Total Current Assets was $10,623 Mil.
Total Assets was $17,994 Mil.
Property, Plant and Equipment(Net PPE) was $804 Mil.
Depreciation, Depletion and Amortization(DDA) was $661 Mil.
Selling, General & Admin. Expense(SGA) was $5,363 Mil.
Total Current Liabilities was $8,472 Mil.
Long-Term Debt was $26 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)
=(4298.605 / 35337.28) / (4061.037 / 33037.151)
=0.12164504 / 0.12292334
=0.9896

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)
=(9832.468 / 33037.151) / (10444.94 / 35337.28)
=0.29761852 / 0.29557849
=1.0069

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 - (11368.406 + 928.9) / 20443.741) / (1 - (10623.048 + 804.012) / 17993.875)
=0.39848064 / 0.36494724
=1.0919

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
=35337.28 / 33037.151
=1.0696

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))
=(661.286 / (661.286 + 804.012)) / (734.603 / (734.603 + 928.9))
=0.45129796 / 0.44160005
=1.022

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)
=(5523.796 / 35337.28) / (5363.048 / 33037.151)
=0.15631639 / 0.16233385
=0.9629

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)
=((24.562 + 9170.082) / 20443.741) / ((25.807 + 8472.398) / 17993.875)
=0.4497535 / 0.47228321
=0.9523

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
=(4297.469 - 768.785 - 5015.74) / 20443.741
=-0.0727

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 -2.70 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

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 1.10420.68020.64730.63310.96371.05431.05761.11111.00280.9896
GMI 1.01621.02861.03651.03171.01951.01311.00381.00571.00911.0069
AQI 1.161.11971.02471.06071.26141.21091.17751.10651.01181.0919
SGI 1.04871.0621.07131.05411.03261.01911.0221.0421.05721.0696
DEPI 0.98420.93540.91290.95360.98391.02891.06151.02891.03151.022
SGAI 0.96870.94170.92510.9440.96330.97870.99820.97140.96240.9629
LVGI 0.94050.97370.98981.01741.0251.01990.94610.93290.92340.9523
TATA -0.0295-0.0652-0.066-0.0692-0.0546-0.0436-0.0378-0.039-0.0603-0.0727
M-score -2.38-2.95-3.01-3.05-2.63-2.52-2.49-2.45-2.66-2.70
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