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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

BHI' s 10-Year Beneish M-Score Range
Min: -3.01   Max: -1.27
Current: -2.71

-3.01
-1.27

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.27. The lowest was -3.01. 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 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 * 0.9518+0.528 * 0.9386+0.404 * 0.9991+0.892 * 1.0892+0.115 * 0.9617
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9367+4.679 * -0.0507-0.327 * 1.0168
=-2.71

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $5,539 Mil.
Revenue was 6250 + 5935 + 5731 + 5860 = $23,776 Mil.
Gross Profit was 1143 + 1190 + 1011 + 974 = $4,318 Mil.
Total Current Assets was $11,811 Mil.
Total Assets was $28,642 Mil.
Property, Plant and Equipment(Net PPE) was $9,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,782 Mil.
Selling, General & Admin. Expense(SGA) was $1,313 Mil.
Total Current Liabilities was $4,962 Mil.
Long-Term Debt was $3,894 Mil.
Net Income was 375 + 353 + 328 + 248 = $1,304 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1058 + 393 + 303 + 1003 = $2,757 Mil.
Accounts Receivable was $5,343 Mil.
Revenue was 5787 + 5487 + 5230 + 5325 = $21,829 Mil.
Gross Profit was 1037 + 896 + 904 + 884 = $3,721 Mil.
Total Current Assets was $11,507 Mil.
Total Assets was $28,074 Mil.
Property, Plant and Equipment(Net PPE) was $8,964 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,679 Mil.
Selling, General & Admin. Expense(SGA) was $1,287 Mil.
Total Current Liabilities was $4,699 Mil.
Long-Term Debt was $3,838 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)
=(5539 / 23776) / (5343 / 21829)
=0.23296602 / 0.24476614
=0.9518

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)
=(1190 / 21829) / (1143 / 23776)
=0.17046131 / 0.18161171
=0.9386

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 - (11811 + 9081) / 28642) / (1 - (11507 + 8964) / 28074)
=0.27058166 / 0.27081998
=0.9991

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
=23776 / 21829
=1.0892

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))
=(1679 / (1679 + 8964)) / (1782 / (1782 + 9081))
=0.15775627 / 0.16404308
=0.9617

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)
=(1313 / 23776) / (1287 / 21829)
=0.05522376 / 0.05895827
=0.9367

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)
=((3894 + 4962) / 28642) / ((3838 + 4699) / 28074)
=0.30919629 / 0.30408919
=1.0168

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
=(1304 - 0 - 2757) / 28642
=-0.0507

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 -2.71 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.02611.04410.97751.00381.01771.03721.13380.89940.91641.0192
GMI 0.95850.91090.78631.15561.04241.40491.04680.9731.22831.1003
AQI 0.95280.90530.66520.93750.76091.13051.93170.88630.92240.9552
SGI 1.15751.18191.25631.15521.13770.81461.49151.37581.07721.047
DEPI 0.91250.9751.14761.06580.98280.99971.26750.95810.99090.9683
SGAI 0.95290.93641.03340.61611.04411.24090.74830.6921.02670.9479
LVGI 0.88670.91980.99130.88051.32540.82210.98021.01551.00881.0153
TATA -0.0427-0.02270.00290.00390.0013-0.0719-0.00220.0109-0.0196-0.0739
M-score -2.52-2.43-2.49-2.15-2.52-2.66-1.45-2.20-2.50-2.73

Baker Hughes Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.93170.86750.92530.99181.04461.06321.01920.95990.94680.9518
GMI 1.00911.11251.2261.24381.29141.20181.10031.04950.94240.9386
AQI 0.85330.82040.92240.9320.94940.99930.95520.97460.97720.9991
SGI 1.20671.15881.06671.01830.9981.00451.0471.07671.08951.0892
DEPI 1.06730.99270.99090.96170.94070.98930.96830.97840.97960.9617
SGAI 0.8740.99231.02551.01251.04140.96550.94790.92950.90810.9367
LVGI 1.13951.11321.00881.01890.98960.9721.01530.98090.98411.0168
TATA 0.0246-0.0135-0.0196-0.0404-0.0654-0.0707-0.0739-0.0689-0.0534-0.0507
M-score -2.31-2.57-2.50-2.57-2.62-2.63-2.73-2.74-2.72-2.71
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