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Baxter International Inc (NYSE:BAX)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

BAX' s 10-Year Beneish M-Score Range
Min: -2.9   Max: -0.36
Current: -2.78

-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 * 0.9678+0.528 * 0.9787+0.404 * 0.7001+0.892 * 1.0113+0.115 * 1.0244
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0633+4.679 * -0.0183-0.327 * 1.1771
=-2.78

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $2,852 Mil.
Revenue was 3893 + 3764 + 4472 + 4197 = $16,326 Mil.
Gross Profit was 1920 + 1801 + 2224 + 2073 = $8,018 Mil.
Total Current Assets was $14,497 Mil.
Total Assets was $30,015 Mil.
Property, Plant and Equipment(Net PPE) was $8,967 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,013 Mil.
Selling, General & Admin. Expense(SGA) was $4,243 Mil.
Total Current Liabilities was $6,312 Mil.
Long-Term Debt was $12,054 Mil.
Net Income was 332 + 430 + 953 + 468 = $2,183 Mil.
Non Operating Income was -67 + 74 + -123 + 0 = $-116 Mil.
Cash Flow from Operations was 696 + 96 + 1143 + 914 = $2,849 Mil.
Accounts Receivable was $2,914 Mil.
Revenue was 4154 + 3848 + 4368 + 3774 = $16,144 Mil.
Gross Profit was 1969 + 1891 + 1954 + 1946 = $7,760 Mil.
Total Current Assets was $9,487 Mil.
Total Assets was $25,629 Mil.
Property, Plant and Equipment(Net PPE) was $8,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $946 Mil.
Selling, General & Admin. Expense(SGA) was $3,946 Mil.
Total Current Liabilities was $5,795 Mil.
Long-Term Debt was $7,528 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)
=(2852 / 16326) / (2914 / 16144)
=0.17469068 / 0.1805005
=0.9678

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)
=(1801 / 16144) / (1920 / 16326)
=0.48067393 / 0.49111846
=0.9787

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 - (14497 + 8967) / 30015) / (1 - (9487 + 8152) / 25629)
=0.21825754 / 0.31175621
=0.7001

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
=16326 / 16144
=1.0113

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))
=(946 / (946 + 8152)) / (1013 / (1013 + 8967))
=0.1039789 / 0.10150301
=1.0244

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)
=(4243 / 16326) / (3946 / 16144)
=0.2598922 / 0.24442517
=1.0633

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)
=((12054 + 6312) / 30015) / ((7528 + 5795) / 25629)
=0.61189405 / 0.51984081
=1.1771

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
=(2183 - -116 - 2849) / 30015
=-0.0183

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 -2.78 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 0.81540.98771.01570.89141.14280.96240.98770.98111.11630.8813
GMI 0.99070.91050.93150.98710.95571.11970.91470.98571.03371.0173
AQI 1.02520.87160.89551.11370.95491.07221.05930.9611.25830.8534
SGI 1.03581.05371.08531.09631.01731.02241.08181.02141.07531.0925
DEPI 0.98491.02581.04410.9521.09420.95521.06541.03441.09950.9181
SGAI 11.06681.01790.97620.9951.04121.0031.03181.02981.0018
LVGI 0.88980.81371.00671.07271.00281.05511.04811.00681.06970.9708
TATA -0.0406-0.0494-0.037-0.0308-0.038-0.0814-0.0267-0.0459-0.0462-0.023
M-score -2.77-2.72-2.64-2.62-2.54-2.81-2.57-2.72-2.42-2.66

Baxter International Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.9731.02951.14041.11631.06271.10570.90820.88130.90610.9678
GMI 0.98230.98260.99041.03371.04391.07451.08241.01731.0150.9787
AQI 0.97390.84661.31481.25831.20081.42260.90870.85340.85220.7001
SGI 1.01811.02241.04371.07531.09891.12531.13131.09251.05931.0113
DEPI 1.04481.0821.17611.09951.0490.98160.86040.91810.92761.0244
SGAI 1.03671.03961.10531.02981.0261.02660.96731.00181.02811.0633
LVGI 0.9911.09711.06391.06971.06560.93960.99460.97081.06181.1771
TATA -0.0438-0.0331-0.0407-0.0515-0.0602-0.0536-0.0525-0.0245-0.014-0.0183
M-score -2.71-2.69-2.40-2.44-2.53-2.30-2.70-2.67-2.66-2.78
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