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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-2.68 (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 -2.68 suggests that the company is not a manipulator.

BHI' s 10-Year Beneish M-Score Range
Min: -2.97   Max: -1.45
Current: -2.68

-2.97
-1.45

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.45. The lowest was -2.97. And the median was -2.52.


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 * 0.9606+0.528 * 0.8707+0.404 * 0.989+0.892 * 1.0978+0.115 * 0.945
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8865+4.679 * -0.0428-0.327 * 0.9793
=-2.68

* 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 $5,418 Mil.
Revenue was 6635 + 6250 + 5935 + 5731 = $24,551 Mil.
Gross Profit was 1461 + 1143 + 1190 + 1011 = $4,805 Mil.
Total Current Assets was $12,045 Mil.
Total Assets was $28,827 Mil.
Property, Plant and Equipment(Net PPE) was $9,063 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,814 Mil.
Selling, General & Admin. Expense(SGA) was $1,271 Mil.
Total Current Liabilities was $4,637 Mil.
Long-Term Debt was $3,913 Mil.
Net Income was 663 + 375 + 353 + 328 = $1,719 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1199 + 1058 + 393 + 303 = $2,953 Mil.
Accounts Receivable was $5,138 Mil.
Revenue was 5860 + 5787 + 5487 + 5230 = $22,364 Mil.
Gross Profit was 974 + 1037 + 896 + 904 = $3,811 Mil.
Total Current Assets was $11,295 Mil.
Total Assets was $27,934 Mil.
Property, Plant and Equipment(Net PPE) was $9,076 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,698 Mil.
Selling, General & Admin. Expense(SGA) was $1,306 Mil.
Total Current Liabilities was $4,578 Mil.
Long-Term Debt was $3,882 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)
=(5418 / 24551) / (5138 / 22364)
=0.22068348 / 0.22974423
=0.9606

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)
=(1143 / 22364) / (1461 / 24551)
=0.1704078 / 0.19571504
=0.8707

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 - (12045 + 9063) / 28827) / (1 - (11295 + 9076) / 27934)
=0.2677698 / 0.27074533
=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
=24551 / 22364
=1.0978

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))
=(1698 / (1698 + 9076)) / (1814 / (1814 + 9063))
=0.15760163 / 0.16677393
=0.945

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)
=(1271 / 24551) / (1306 / 22364)
=0.05176979 / 0.05839742
=0.8865

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)
=((3913 + 4637) / 28827) / ((3882 + 4578) / 27934)
=0.29659694 / 0.30285673
=0.9793

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
=(1719 - 0 - 2953) / 28827
=-0.0428

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 -2.68 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.

Baker Hughes Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.04410.97751.00381.01771.03721.13380.89940.91641.01920.9606
GMI 0.91090.78631.15561.04241.40491.04680.9731.22831.10030.8707
AQI 0.90530.66520.93750.76091.13051.93170.88630.92240.95520.989
SGI 1.18191.25631.15521.13770.81461.49151.37581.07721.0471.0978
DEPI 0.9751.14761.06580.98280.99971.26750.95810.99090.96830.945
SGAI 0.93641.03340.61611.04411.24090.74830.6921.02670.94790.8865
LVGI 0.91980.99130.88051.32540.82210.98021.01551.00881.01530.9793
TATA -0.02270.00290.00390.0013-0.0719-0.00220.0109-0.0196-0.0739-0.0428
M-score -2.43-2.49-2.15-2.52-2.66-1.45-2.20-2.50-2.73-2.68

Baker Hughes Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.86750.92530.99181.04461.06321.01920.95990.94680.95180.9606
GMI 1.11251.2261.24381.29141.20181.10031.04950.94240.93860.8707
AQI 0.82040.92240.9320.94940.99930.95520.97460.97720.99910.989
SGI 1.15881.06671.01830.9981.00451.0471.07671.08951.08921.0978
DEPI 0.99270.99090.96170.94070.98930.96830.97840.97960.96170.945
SGAI 0.99231.02551.01251.04140.96550.94790.92950.90810.93670.8865
LVGI 1.11321.00881.01890.98960.9721.01530.98090.98411.01680.9793
TATA -0.0135-0.0196-0.0404-0.0654-0.0707-0.0739-0.0689-0.0534-0.0507-0.0428
M-score -2.57-2.50-2.57-2.62-2.63-2.73-2.74-2.72-2.71-2.68
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