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Baxter International Inc (NYSE:BAX)
Beneish M-Score
-2.79 (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.

Baxter International Inc has a M-score of -2.79 suggests that the company is not a manipulator.

BAX' s Beneish M-Score Range Over the Past 10 Years
Min: -2.97   Max: -0.36
Current: -2.79

-2.97
-0.36

During the past 13 years, the highest Beneish M-Score of Baxter International Inc was -0.36. The lowest was -2.97. And the median was -2.63.


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 Baxter International 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 * 0.7473+0.528 * 1.0171+0.404 * 1.0647+0.892 * 0.9422+0.115 * 0.546
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0018+4.679 * -0.029-0.327 * 0.6137
=-2.79

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,830 Mil.
Revenue was 2375 + 2603 + 2487 + 3893 = $11,358 Mil.
Gross Profit was 965 + 1072 + 1034 + 1920 = $4,991 Mil.
Total Current Assets was $8,017 Mil.
Total Assets was $17,350 Mil.
Property, Plant and Equipment(Net PPE) was $4,403 Mil.
Depreciation, Depletion and Amortization(DDA) was $761 Mil.
Selling, General & Admin. Expense(SGA) was $3,265 Mil.
Total Current Liabilities was $3,823 Mil.
Long-Term Debt was $2,068 Mil.
Net Income was 3380 + 205 + 1 + 332 = $3,918 Mil.
Non Operating Income was 3169 + 59 + -91 + 67 = $3,204 Mil.
Cash Flow from Operations was -333 + 724 + 131 + 696 = $1,218 Mil.
Accounts Receivable was $2,599 Mil.
Revenue was 2403 + 2789 + 2709 + 4154 = $12,055 Mil.
Gross Profit was 1019 + 1207 + 1193 + 1969 = $5,388 Mil.
Total Current Assets was $9,734 Mil.
Total Assets was $24,861 Mil.
Property, Plant and Equipment(Net PPE) was $8,492 Mil.
Depreciation, Depletion and Amortization(DDA) was $743 Mil.
Selling, General & Admin. Expense(SGA) was $3,459 Mil.
Total Current Liabilities was $6,074 Mil.
Long-Term Debt was $7,680 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)
=(1830 / 11358) / (2599 / 12055)
=0.16111992 / 0.21559519
=0.7473

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)
=(5388 / 12055) / (4991 / 11358)
=0.44695147 / 0.43942596
=1.0171

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 - (8017 + 4403) / 17350) / (1 - (9734 + 8492) / 24861)
=0.28414986 / 0.26688387
=1.0647

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
=11358 / 12055
=0.9422

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))
=(743 / (743 + 8492)) / (761 / (761 + 4403))
=0.08045479 / 0.14736638
=0.546

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)
=(3265 / 11358) / (3459 / 12055)
=0.28746258 / 0.28693488
=1.0018

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)
=((2068 + 3823) / 17350) / ((7680 + 6074) / 24861)
=0.3395389 / 0.55323599
=0.6137

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
=(3918 - 3204 - 1218) / 17350
=-0.029

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.

Baxter International Inc has a M-score of -2.79 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 own currency.

Baxter International Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98771.01570.89141.14280.96240.98770.98111.11630.62321.8151
GMI 0.91050.93150.98710.95571.11970.91470.98571.03371.01731.1764
AQI 0.87160.89551.11370.95491.07221.05930.9611.15611.54760.5175
SGI 1.05371.08531.09631.01731.02241.08181.02141.07531.09250.5979
DEPI 1.02581.04410.9521.09420.95521.06541.03441.09950.51461.2525
SGAI 1.06681.01790.97620.9951.04121.0031.03181.02981.00181.2843
LVGI 0.81371.00671.07271.00281.05511.04811.00681.04560.96460.9028
TATA -0.0494-0.037-0.0301-0.038-0.0814-0.0267-0.0459-0.0474-0.0228-0.0374
M-score -2.72-2.64-2.62-2.54-2.81-2.57-2.72-2.46-2.67-2.35

Baxter International Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.74351.63521.67321.55290.48390.79570.86970.51071.28680.7473
GMI 1.14571.15891.20981.29870.96350.98990.93840.88121.04651.0171
AQI 1.15611.20081.42260.90871.54760.85220.70010.79520.51751.0647
SGI 0.68850.71410.74360.66171.4071.20611.12541.22080.84340.9422
DEPI 1.39411.30721.19971.2640.49490.98861.03860.46491.02730.546
SGAI 1.37321.35531.34241.34960.82090.89090.94110.8991.12711.0018
LVGI 1.04561.06560.93960.99460.96461.06181.17710.90110.90280.6137
TATA -0.0431-0.0505-0.0482-0.0481-0.0264-0.0167-0.0261-0.0178-0.0381-0.029
M-score -2.17-2.27-2.05-2.41-2.53-2.63-2.81-2.97-2.69-2.79
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