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Beam Inc (NYSE:BEAM)
Beneish M-Score
-2.48 (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.

Beam Inc has a M-score of -2.48 suggests that the company is not a manipulator.

BEAM' s 10-Year Beneish M-Score Range
Min: -3.38   Max: -1.65
Current: -2.48

-3.38
-1.65

During the past 13 years, the highest Beneish M-Score of Beam Inc was -1.65. The lowest was -3.38. And the median was -2.55.


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 Beam 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 * 0.9106+0.528 * 1.0055+0.404 * 0.989+0.892 * 1.0352+0.115 * 0.9522
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9283+4.679 * -0.0012-0.327 * 0.8426
=-2.48

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $427 Mil.
Revenue was 739.5 + 598.7 + 637.6 + 577.7 = $2,554 Mil.
Gross Profit was 414.6 + 343.4 + 374.1 + 349.1 = $1,481 Mil.
Total Current Assets was $2,890 Mil.
Total Assets was $8,585 Mil.
Property, Plant and Equipment(Net PPE) was $816 Mil.
Depreciation, Depletion and Amortization(DDA) was $121 Mil.
Selling, General & Admin. Expense(SGA) was $793 Mil.
Total Current Liabilities was $707 Mil.
Long-Term Debt was $2,025 Mil.
Net Income was 90.3 + 84.8 + 74.3 + 114.5 = $364 Mil.
Non Operating Income was 4.8 + -13.5 + -42.3 + 1.4 = $-50 Mil.
Cash Flow from Operations was 309.7 + 142.5 + 31.1 + -59.5 = $424 Mil.
Accounts Receivable was $453 Mil.
Revenue was 709.2 + 626.7 + 597 + 533.8 = $2,467 Mil.
Gross Profit was 405.4 + 371 + 347.6 + 314.7 = $1,439 Mil.
Total Current Assets was $2,903 Mil.
Total Assets was $8,676 Mil.
Property, Plant and Equipment(Net PPE) was $788 Mil.
Depreciation, Depletion and Amortization(DDA) was $111 Mil.
Selling, General & Admin. Expense(SGA) was $825 Mil.
Total Current Liabilities was $1,251 Mil.
Long-Term Debt was $2,025 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)
=(427 / 2553.5) / (453 / 2466.7)
=0.16722146 / 0.18364617
=0.9106

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)
=(343.4 / 2466.7) / (414.6 / 2553.5)
=0.58324888 / 0.58006658
=1.0055

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 - (2890.1 + 815.7) / 8584.7) / (1 - (2902.6 + 787.9) / 8676.1)
=0.56832504 / 0.57463607
=0.989

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
=2553.5 / 2466.7
=1.0352

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))
=(110.5 / (110.5 + 787.9)) / (121 / (121 + 815.7))
=0.12299644 / 0.1291769
=0.9522

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)
=(793.2 / 2553.5) / (825.4 / 2466.7)
=0.31063247 / 0.3346171
=0.9283

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)
=((2024.5 + 706.6) / 8584.7) / ((2024.9 + 1250.7) / 8676.1)
=0.31813575 / 0.37754291
=0.8426

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
=(363.9 - -49.6 - 423.8) / 8584.7
=-0.0012

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.

Beam Inc has a M-score of -2.48 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.

Beam Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.95841.04980.85220.96940.88211.17433.19030.36911.10320.9102
GMI 1.01570.98470.97481.0171.07690.85640.81.02530.98081.0052
AQI 0.9591.28740.94981.01370.96260.97210.95781.06110.99480.989
SGI 1.18750.95921.22570.97540.94490.87990.31291.10321.06431.0356
DEPI 0.89821.17261.01950.81570.97110.98691.01180.68091.74490.9522
SGAI 0.95370.99270.99671.00821.03851.10461.19491.08940.88890.9279
LVGI 0.91621.40530.88160.84031.1240.97720.95390.78371.0630.8426
TATA -0.0074-0.0078-0.0131-0.0185-0.0001-0.0499-0.02180.0759-0.003-0.0014
M-score -2.37-2.51-2.47-2.57-2.66-2.76-1.32-2.56-2.27-2.48

Beam Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.97140.37190.62362.74663.39751.27630.71840.20970.20160.9106
GMI 0.93611.02520.8220.43190.42340.96191.16282.17532.19181.0055
AQI 1.04751.06111.03361.06831.02720.99481.01530.93820.95530.989
SGI 0.40991.0950.56480.1735-0.16890.921.72245.51975.45911.0352
DEPI 0.92080.68090.80281.06981.31951.74491.40541.17071.17520.9522
SGAI 1.44741.07091.38353.00462.6980.88830.70290.31210.30750.9283
LVGI 0.75290.78370.79060.93051.0881.0631.00440.9410.87940.8426
TATA 0.03840.07590.0530.03510.0112-0.00280.00290.01260.0066-0.0012
M-score -1.95-2.56-3.07-2.03-1.84-2.25-1.891.641.58-2.48
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