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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-8.91 (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.

Baker Hughes Inc has a M-score of -8.91 suggests that the company is not a manipulator.

BHI' s Beneish M-Score Range Over the Past 10 Years
Min: -16.26   Max: -1.27
Current: -8.91

-16.26
-1.27

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.27. The lowest was -16.26. And the median was -2.54.


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 Baker Hughes 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 * 1.1001+0.528 * -6.9765+0.404 * 0.9382+0.892 * 0.5702+0.115 * 0.8487
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7536+4.679 * -0.3765-0.327 * 0.9796
=-8.91

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,207 Mil.
Revenue was 2353 + 2408 + 2670 + 3394 = $10,825 Mil.
Gross Profit was 294 + -704 + 12 + 193 = $-205 Mil.
Total Current Assets was $9,002 Mil.
Total Assets was $19,491 Mil.
Property, Plant and Equipment(Net PPE) was $4,874 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,337 Mil.
Selling, General & Admin. Expense(SGA) was $1,056 Mil.
Total Current Liabilities was $2,224 Mil.
Long-Term Debt was $2,895 Mil.
Net Income was -429 + -911 + -981 + -1031 = $-3,352 Mil.
Non Operating Income was 0 + -142 + 0 + 0 = $-142 Mil.
Cash Flow from Operations was 119 + 3577 + -99 + 531 = $4,128 Mil.
Accounts Receivable was $3,518 Mil.
Revenue was 3786 + 3968 + 4594 + 6635 = $18,983 Mil.
Gross Profit was 411 + 384 + 252 + 1461 = $2,508 Mil.
Total Current Assets was $9,586 Mil.
Total Assets was $25,416 Mil.
Property, Plant and Equipment(Net PPE) was $8,026 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,794 Mil.
Selling, General & Admin. Expense(SGA) was $1,056 Mil.
Total Current Liabilities was $2,918 Mil.
Long-Term Debt was $3,896 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)
=(2207 / 10825) / (3518 / 18983)
=0.20387991 / 0.18532371
=1.1001

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)
=(2508 / 18983) / (-205 / 10825)
=0.13211821 / -0.01893764
=-6.9765

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 - (9002 + 4874) / 19491) / (1 - (9586 + 8026) / 25416)
=0.28808168 / 0.30705068
=0.9382

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
=10825 / 18983
=0.5702

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))
=(1794 / (1794 + 8026)) / (1337 / (1337 + 4874))
=0.18268839 / 0.21526324
=0.8487

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)
=(1056 / 10825) / (1056 / 18983)
=0.09755196 / 0.05562872
=1.7536

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)
=((2895 + 2224) / 19491) / ((3896 + 2918) / 25416)
=0.26263404 / 0.26809884
=0.9796

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
=(-3352 - -142 - 4128) / 19491
=-0.3765

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.

Baker Hughes Inc has a M-score of -8.91 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 local exchange's currency.

Baker Hughes Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.97751.00381.01771.03721.13380.89940.91641.01920.96060.926
GMI 0.78631.15561.04241.40491.04680.9731.22831.10030.87072.4846
AQI 0.66520.93750.76091.13051.93170.88630.92240.95520.9891.2592
SGI 1.25631.15521.13770.81461.49151.37581.07721.0471.09780.6412
DEPI 1.14761.06580.98280.99971.26750.95810.99090.96830.9450.8075
SGAI 1.03340.61611.04411.24090.74830.6921.02670.94790.88651.4393
LVGI 0.99130.88051.32540.82210.98021.01551.00881.01530.97930.9332
TATA 0.00290.00390.0013-0.0719-0.00220.0109-0.0196-0.0739-0.0428-0.1563
M-score -2.49-2.15-2.52-2.66-1.45-2.20-2.50-2.73-2.68-2.79

Baker Hughes Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.94680.95180.96060.8260.7470.79550.9261.0651.07431.1001
GMI 0.94240.93860.87070.99161.19591.37462.48462.3878-21.0434-6.9765
AQI 0.97720.99910.9891.04791.09691.13481.25921.20150.94470.9382
SGI 1.08951.08921.09781.0240.920.79840.64120.59020.57150.5702
DEPI 0.97960.96170.9450.90340.9050.89790.80750.85960.79760.8487
SGAI 0.90810.93670.88650.9330.96991.00731.45531.50891.59381.7536
LVGI 0.98411.01680.97930.94170.89790.86710.93320.97540.95330.9796
TATA -0.0534-0.0507-0.0428-0.0781-0.1089-0.1077-0.1563-0.1657-0.3631-0.3765
M-score -2.72-2.71-2.68-2.95-3.12-3.07-2.79-2.84-16.26-8.91
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