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Baker Hughes Inc. (NYSE:BHI)
Beneish M-Score
-2.73 (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 -2.30 suggests that the company is not a manipulator.

BHI' s 10-Year Beneish M-Score Range
Min: -2.97   Max: -1.45
Current: -2.73

-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 -2.51.


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+0.528 * 1.0907+0.404 * 3.528+0.892 * 0.7726+0.115 * 0.1526
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.954+4.679 * 0-0.327 * 0
=-2.30

* 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 $0 Mil.
Revenue was 0 + 5787 + 5487 + 5230 = $16,504 Mil.
Gross Profit was 0 + 1037 + 896 + 904 = $2,837 Mil.
Total Current Assets was $0 Mil.
Total Assets was $0 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,537 Mil.
Selling, General & Admin. Expense(SGA) was $970 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $0 Mil.
Net Income was 0 + 341 + 240 + 267 = $848 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2081 + 1080 + 692 + 386 = $4,239 Mil.
Accounts Receivable was $4,815 Mil.
Revenue was 5325 + 5355 + 5326 + 5355 = $21,361 Mil.
Gross Profit was 884 + 959 + 1072 + 1090 = $4,005 Mil.
Total Current Assets was $10,417 Mil.
Total Assets was $26,689 Mil.
Property, Plant and Equipment(Net PPE) was $8,707 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,568 Mil.
Selling, General & Admin. Expense(SGA) was $1,316 Mil.
Total Current Liabilities was $4,124 Mil.
Long-Term Debt was $3,837 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)
=(0 / 16504) / (4815 / 21361)
=0 / 0.2254108
=0

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)
=(1037 / 21361) / (0 / 16504)
=0.18749122 / 0.17189772
=1.0907

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 - (0 + 0) / 0) / (1 - (10417 + 8707) / 26689)
=1 / 0.28345011
=3.528

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
=16504 / 21361
=0.7726

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))
=(1568 / (1568 + 8707)) / (2537 / (2537 + 0))
=0.15260341 / 1
=0.1526

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)
=(970 / 16504) / (1316 / 21361)
=0.05877363 / 0.0616076
=0.954

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)
=((0 + 0) / 0) / ((3837 + 4124) / 26689)
=0 / 0.29828768
=0

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
=(848 - 0 - 4239) / 0
=0

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 -2.30 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.87590.89070.90780.93170.86750.92530.99181.04461.0632
GMI 0.98110.97490.98981.00911.11251.2261.24381.29141.2018
AQI 0.97070.88630.87590.85330.82040.92240.9320.94940.9993
SGI 1.511.38931.27161.20671.15881.06671.01830.9981.0045
DEPI 0.84660.95811.04321.06730.99270.99090.96170.94070.9893
SGAI 0.60940.69270.80750.8740.99231.02551.01251.04140.9655
LVGI 0.95781.01551.05971.13951.11321.00881.01890.98960.972
TATA 0.03420.01090.01650.0246-0.0135-0.0196-0.0404-0.0654-0.0707
M-score -1.94-2.20-2.28-2.31-2.57-2.50-2.57-2.62-2.63
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