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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

BHI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.21   Max: -1.45
Current: -2.79

-4.21
-1.45

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.45. The lowest was -4.21. 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 * 0.926+0.528 * 2.4846+0.404 * 1.2592+0.892 * 0.6412+0.115 * 0.8075
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4393+4.679 * -0.1563-0.327 * 0.9332
=-2.79

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $3,217 Mil.
Revenue was 3394 + 3786 + 3968 + 4594 = $15,742 Mil.
Gross Profit was 252 + 383 + 353 + 252 = $1,240 Mil.
Total Current Assets was $9,268 Mil.
Total Assets was $24,080 Mil.
Property, Plant and Equipment(Net PPE) was $6,693 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,742 Mil.
Selling, General & Admin. Expense(SGA) was $1,173 Mil.
Total Current Liabilities was $2,775 Mil.
Long-Term Debt was $3,890 Mil.
Net Income was -1031 + -159 + -188 + -589 = $-1,967 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 531 + 428 + 581 + 256 = $1,796 Mil.
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.



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)
=(3217 / 15742) / (5418 / 24551)
=0.20435777 / 0.22068348
=0.926

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)
=(383 / 24551) / (252 / 15742)
=0.19571504 / 0.07877017
=2.4846

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 - (9268 + 6693) / 24080) / (1 - (12045 + 9063) / 28827)
=0.33716777 / 0.2677698
=1.2592

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
=15742 / 24551
=0.6412

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))
=(1814 / (1814 + 9063)) / (1742 / (1742 + 6693))
=0.16677393 / 0.20652045
=0.8075

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)
=(1173 / 15742) / (1271 / 24551)
=0.07451404 / 0.05176979
=1.4393

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)
=((3890 + 2775) / 24080) / ((3913 + 4637) / 28827)
=0.27678571 / 0.29659694
=0.9332

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
=(-1967 - 0 - 1796) / 24080
=-0.1563

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 -2.79 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

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

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.01920.95990.94680.95180.96060.8260.7470.79550.9261.065
GMI 1.10031.04950.94240.93860.87070.99161.20751.40772.48462.3878
AQI 0.95520.97460.97720.99910.9891.04791.09691.13481.25921.2015
SGI 1.0471.07671.08951.08921.09781.0240.920.79840.64120.5902
DEPI 0.96830.97840.97960.96170.9450.90340.9050.89790.80750.8596
SGAI 0.94790.92950.90810.93670.88650.9541.03141.13521.43931.4209
LVGI 1.01530.98090.98411.01680.97930.94170.89790.86710.93320.9754
TATA -0.0739-0.0689-0.0534-0.0507-0.0428-0.0781-0.1089-0.1077-0.1563-0.1657
M-score -2.73-2.74-2.72-2.71-2.68-2.95-3.13-3.07-2.79-2.83
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