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Baxter International Inc (NYSE:BAX)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

BAX' s 10-Year Beneish M-Score Range
Min: -2.84   Max: -2.4
Current: -2.64

-2.84
-2.4

During the past 13 years, the highest Beneish M-Score of Baxter International Inc was -2.40. The lowest was -2.84. And the median was -2.59.


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 * 0.864+0.528 * 1.0203+0.404 * 0.9288+0.892 * 1.1145+0.115 * 0.9181
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9921+4.679 * -0.0233-0.327 * 0.9932
=-2.64

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,803 Mil.
Revenue was 4472 + 4197 + 4264 + 3951 = $16,884 Mil.
Gross Profit was 2224 + 2073 + 2041 + 1961 = $8,299 Mil.
Total Current Assets was $10,351 Mil.
Total Assets was $25,917 Mil.
Property, Plant and Equipment(Net PPE) was $8,698 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,005 Mil.
Selling, General & Admin. Expense(SGA) was $4,049 Mil.
Total Current Liabilities was $6,042 Mil.
Long-Term Debt was $7,606 Mil.
Net Income was 953 + 468 + 520 + 556 = $2,497 Mil.
Non Operating Income was -123 + 0 + -15 + 24 = $-114 Mil.
Cash Flow from Operations was 1143 + 914 + 599 + 559 = $3,215 Mil.
Accounts Receivable was $2,911 Mil.
Revenue was 4322 + 3710 + 3669 + 3448 = $15,149 Mil.
Gross Profit was 1996 + 1906 + 1939 + 1756 = $7,597 Mil.
Total Current Assets was $10,195 Mil.
Total Assets was $25,224 Mil.
Property, Plant and Equipment(Net PPE) was $7,832 Mil.
Depreciation, Depletion and Amortization(DDA) was $823 Mil.
Selling, General & Admin. Expense(SGA) was $3,662 Mil.
Total Current Liabilities was $5,248 Mil.
Long-Term Debt was $8,126 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)
=(2803 / 16884) / (2911 / 15149)
=0.16601516 / 0.1921579
=0.864

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)
=(2073 / 15149) / (2224 / 16884)
=0.50148525 / 0.49153044
=1.0203

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 - (10351 + 8698) / 25917) / (1 - (10195 + 7832) / 25224)
=0.26499981 / 0.2853235
=0.9288

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
=16884 / 15149
=1.1145

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))
=(823 / (823 + 7832)) / (1005 / (1005 + 8698))
=0.09508954 / 0.10357621
=0.9181

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)
=(4049 / 16884) / (3662 / 15149)
=0.23981284 / 0.24173213
=0.9921

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)
=((7606 + 6042) / 25917) / ((8126 + 5248) / 25224)
=0.52660416 / 0.53020932
=0.9932

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
=(2497 - -114 - 3215) / 25917
=-0.0233

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 -2.64 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.81540.98771.01570.89141.14280.96240.98770.98111.13810.8645
GMI 0.99070.91050.93150.98710.95571.11970.91470.98571.03061.0203
AQI 1.02520.87160.89551.11370.95491.07221.05930.9611.15610.9288
SGI 1.03581.05371.08531.09631.01731.02241.08181.02141.05481.1139
DEPI 0.98491.02581.04410.9521.09420.95521.06541.03441.09950.9181
SGAI 11.06681.01790.97620.9951.04121.0031.03181.03880.9932
LVGI 0.88980.81371.00671.07271.00281.05511.04811.00681.04560.9932
TATA -0.0406-0.0494-0.037-0.0308-0.038-0.0814-0.0267-0.0459-0.0474-0.023
M-score -2.77-2.72-2.64-2.62-2.54-2.81-2.57-2.72-2.46-2.63

Baxter International Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.97370.98110.9731.02951.14541.12441.06311.09870.89520.864
GMI 0.97980.98570.98230.98260.99141.0261.03381.06171.06741.0203
AQI 0.99030.9610.97390.84661.31481.15611.20081.42260.90870.9288
SGI 1.0171.02141.01811.02241.03911.06761.09841.13241.14771.1145
DEPI 1.04541.03441.04481.0821.17611.09951.0490.98160.86040.9181
SGAI 1.00521.03181.03671.03961.10751.03191.0241.02030.95820.9921
LVGI 1.05261.00680.9911.09711.06391.04561.06560.93960.99460.9932
TATA -0.0356-0.0398-0.0361-0.025-0.0331-0.0448-0.0523-0.0499-0.051-0.0233
M-score -2.68-2.69-2.68-2.65-2.36-2.45-2.50-2.29-2.69-2.64
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