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Baxter International Inc (NYSE:BAX)
Beneish M-Score
-2.88 (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 -2.88 suggests that the company is not a manipulator.

BAX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: -0.36
Current: -2.88

-3.25
-0.36

During the past 13 years, the highest Beneish M-Score of Baxter International Inc was -0.36. The lowest was -3.25. And the median was -2.74.


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 * 0.4963+0.528 * 0.9284+0.404 * 0.7952+0.892 * 1.2562+0.115 * 0.4815
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9437+4.679 * -0.0055-0.327 * 0.9011
=-2.88

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,772 Mil.
Revenue was 2487 + 3893 + 3764 + 8741 = $18,885 Mil.
Gross Profit was 1034 + 1920 + 1801 + 4783 = $9,538 Mil.
Total Current Assets was $11,138 Mil.
Total Assets was $20,172 Mil.
Property, Plant and Equipment(Net PPE) was $4,338 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,006 Mil.
Selling, General & Admin. Expense(SGA) was $4,480 Mil.
Total Current Liabilities was $5,981 Mil.
Long-Term Debt was $3,791 Mil.
Net Income was 1 + 332 + 430 + 953 = $1,716 Mil.
Non Operating Income was -91 + -67 + 74 + -155 = $-239 Mil.
Cash Flow from Operations was 131 + 696 + 96 + 1143 = $2,066 Mil.
Accounts Receivable was $2,842 Mil.
Revenue was 2709 + 4154 + 3848 + 4322 = $15,033 Mil.
Gross Profit was 1193 + 1969 + 1891 + 1996 = $7,049 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 $842 Mil.
Selling, General & Admin. Expense(SGA) was $3,779 Mil.
Total Current Liabilities was $5,990 Mil.
Long-Term Debt was $7,753 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)
=(1772 / 18885) / (2842 / 15033)
=0.09383108 / 0.18905076
=0.4963

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)
=(1920 / 15033) / (1034 / 18885)
=0.46890175 / 0.50505692
=0.9284

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 - (11138 + 4338) / 20172) / (1 - (9631 + 8448) / 25563)
=0.23279794 / 0.29276689
=0.7952

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
=18885 / 15033
=1.2562

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))
=(842 / (842 + 8448)) / (1006 / (1006 + 4338))
=0.09063509 / 0.1882485
=0.4815

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)
=(4480 / 18885) / (3779 / 15033)
=0.23722531 / 0.2513803
=0.9437

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)
=((3791 + 5981) / 20172) / ((7753 + 5990) / 25563)
=0.48443387 / 0.53761296
=0.9011

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
=(1716 - -239 - 2066) / 20172
=-0.0055

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 -2.88 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 0.98771.01570.89141.14280.96240.98770.9991.11770.8645
GMI 0.91050.93150.98710.95571.11970.91470.99071.02541.0203
AQI 0.87160.89551.11370.95491.07221.05930.9611.15610.9288
SGI 1.05371.08531.09631.01731.02241.08181.00311.0741.1139
DEPI 1.02581.04410.9521.09420.95521.06541.03441.09950.9181
SGAI 1.06681.01790.97620.9951.04121.0031.03771.03290.9932
LVGI 0.81371.00671.07271.00281.05511.04811.00681.04560.9932
TATA -0.0494-0.037-0.0308-0.038-0.0814-0.0267-0.0459-0.0474-0.023
M-score -2.72-2.64-2.62-2.54-2.81-2.57-2.72-2.46-2.63

Baxter International Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.16571.10431.05111.09360.97920.74990.77050.82130.4963
GMI 0.99631.02081.03111.06171.09250.99180.98820.95390.9284
AQI 1.31481.15611.20081.42260.90870.92880.85220.70010.7952
SGI 1.0211.0871.1111.13771.04941.2841.24561.19171.2562
DEPI 1.17611.09951.0490.98161.00210.91810.92761.02440.4815
SGAI 1.11441.02611.02221.02270.99840.91430.93610.96440.9437
LVGI 1.06391.04561.06560.93960.99460.99321.06181.17710.9011
TATA -0.0331-0.0448-0.0523-0.0511-0.0528-0.0238-0.0133-0.0178-0.0055
M-score -2.36-2.45-2.50-2.29-2.69-2.59-2.62-2.75-2.88
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