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Baxter International Inc (NYSE:BAX)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

BAX' s 10-Year Beneish M-Score Range
Min: -2.9   Max: -0.36
Current: -2.69

-2.9
-0.36

During the past 13 years, the highest Beneish M-Score of Baxter International Inc was -0.36. The lowest was -2.90. 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 * 0.8799+0.528 * 1.0697+0.404 * 0.9087+0.892 * 1.1678+0.115 * 0.8604
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9509+4.679 * -0.051-0.327 * 0.9946
=-2.69

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $2,842 Mil.
Revenue was 4197 + 4264 + 3951 + 4614 = $17,026 Mil.
Gross Profit was 2073 + 2041 + 1961 + 2119 = $8,194 Mil.
Total Current Assets was $9,631 Mil.
Total Assets was $25,563 Mil.
Property, Plant and Equipment(Net PPE) was $8,448 Mil.
Depreciation, Depletion and Amortization(DDA) was $997 Mil.
Selling, General & Admin. Expense(SGA) was $4,051 Mil.
Total Current Liabilities was $5,990 Mil.
Long-Term Debt was $7,753 Mil.
Net Income was 468 + 520 + 556 + 326 = $1,870 Mil.
Non Operating Income was 0 + -15 + 24 + 9 = $18 Mil.
Cash Flow from Operations was 914 + 599 + 559 + 1083 = $3,155 Mil.
Accounts Receivable was $2,766 Mil.
Revenue was 3710 + 3669 + 3448 + 3753 = $14,580 Mil.
Gross Profit was 1906 + 1939 + 1756 + 1905 = $7,506 Mil.
Total Current Assets was $9,597 Mil.
Total Assets was $25,250 Mil.
Property, Plant and Equipment(Net PPE) was $7,518 Mil.
Depreciation, Depletion and Amortization(DDA) was $751 Mil.
Selling, General & Admin. Expense(SGA) was $3,648 Mil.
Total Current Liabilities was $4,996 Mil.
Long-Term Debt was $8,652 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)
=(2842 / 17026) / (2766 / 14580)
=0.16692118 / 0.18971193
=0.8799

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)
=(2041 / 14580) / (2073 / 17026)
=0.51481481 / 0.48126395
=1.0697

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 - (9631 + 8448) / 25563) / (1 - (9597 + 7518) / 25250)
=0.29276689 / 0.32217822
=0.9087

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
=17026 / 14580
=1.1678

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))
=(751 / (751 + 7518)) / (997 / (997 + 8448))
=0.09082114 / 0.1055585
=0.8604

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)
=(4051 / 17026) / (3648 / 14580)
=0.23793022 / 0.25020576
=0.9509

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)
=((7753 + 5990) / 25563) / ((8652 + 4996) / 25250)
=0.53761296 / 0.54051485
=0.9946

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
=(1870 - 18 - 3155) / 25563
=-0.051

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 -2.69 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.0230.81540.98771.01570.89141.14280.96240.98770.98111.1163
GMI 1.07830.99070.91050.93150.98710.95571.11970.91470.98571.0337
AQI 0.96991.02520.87160.89551.11370.95491.07221.05930.9611.2583
SGI 1.06791.03581.05371.08531.09631.01731.02241.08181.02141.0753
DEPI 0.87730.98491.02581.04410.9521.09420.95521.06541.03441.0995
SGAI 1.016811.06681.01790.97620.9951.04121.0031.03181.0298
LVGI 0.96890.88980.81371.00671.07271.00281.05511.04811.00681.0697
TATA -0.0442-0.0406-0.0494-0.037-0.0301-0.0373-0.0814-0.0267-0.0459-0.0462
M-score -2.58-2.77-2.72-2.64-2.62-2.54-2.81-2.57-2.72-2.42

Baxter International Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.8620.97370.98110.9731.02951.14541.10321.04371.07930.8799
GMI 0.98750.97980.98570.98230.98260.99141.02911.03671.06421.0697
AQI 1.03180.99030.9610.97390.84661.31481.25831.20081.42260.9087
SGI 1.03631.0171.02141.01811.02241.03911.08821.11891.15281.1678
DEPI 0.99561.04541.03441.04481.0821.17611.09951.0490.98160.8604
SGAI 1.03941.00521.03181.03671.03961.10751.02321.01561.01220.9509
LVGI 1.06391.05261.00680.9911.09711.06391.06971.06560.93960.9946
TATA -0.0471-0.0356-0.0398-0.0361-0.025-0.0331-0.0437-0.0523-0.0499-0.051
M-score -2.82-2.68-2.69-2.68-2.65-2.36-2.41-2.50-2.28-2.69
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