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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

BHI' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.27
Current: -2.72

-3.13
-1.27

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.27. The lowest was -3.13. 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 * 0.9468+0.528 * 0.9424+0.404 * 0.9772+0.892 * 1.0895+0.115 * 0.9796
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9081+4.679 * -0.0534-0.327 * 0.9841
=-2.72

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $5,361 Mil.
Revenue was 5935 + 5731 + 5860 + 5787 = $23,313 Mil.
Gross Profit was 1190 + 1011 + 974 + 1037 = $4,212 Mil.
Total Current Assets was $11,547 Mil.
Total Assets was $28,277 Mil.
Property, Plant and Equipment(Net PPE) was $9,087 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,750 Mil.
Selling, General & Admin. Expense(SGA) was $1,309 Mil.
Total Current Liabilities was $4,595 Mil.
Long-Term Debt was $3,900 Mil.
Net Income was 353 + 328 + 248 + 341 = $1,270 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 393 + 303 + 1003 + 1080 = $2,779 Mil.
Accounts Receivable was $5,197 Mil.
Revenue was 5487 + 5230 + 5325 + 5355 = $21,397 Mil.
Gross Profit was 896 + 904 + 884 + 959 = $3,643 Mil.
Total Current Assets was $10,930 Mil.
Total Assets was $27,350 Mil.
Property, Plant and Equipment(Net PPE) was $8,855 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,664 Mil.
Selling, General & Admin. Expense(SGA) was $1,323 Mil.
Total Current Liabilities was $4,508 Mil.
Long-Term Debt was $3,841 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)
=(5361 / 23313) / (5197 / 21397)
=0.22995753 / 0.24288452
=0.9468

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)
=(1011 / 21397) / (1190 / 23313)
=0.17025751 / 0.18067173
=0.9424

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 - (11547 + 9087) / 28277) / (1 - (10930 + 8855) / 27350)
=0.27029034 / 0.27659963
=0.9772

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
=23313 / 21397
=1.0895

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))
=(1664 / (1664 + 8855)) / (1750 / (1750 + 9087))
=0.15818994 / 0.16148381
=0.9796

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)
=(1309 / 23313) / (1323 / 21397)
=0.05614893 / 0.0618311
=0.9081

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)
=((3900 + 4595) / 28277) / ((3841 + 4508) / 27350)
=0.30042084 / 0.30526508
=0.9841

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
=(1270 - 0 - 2779) / 28277
=-0.0534

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 -2.72 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 0.95280.90530.66520.93750.76091.13051.9140.89450.92240.9552
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 0.88670.91980.99130.88051.32540.82210.97411.02191.00881.0153
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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.90780.93170.86750.92530.99181.04461.06321.01920.95990.9468
GMI 0.98981.00911.11251.2261.24381.29141.20181.10031.04950.9424
AQI 0.87590.85330.82040.92240.9320.94940.99930.95520.97460.9772
SGI 1.27161.20671.15881.06671.01830.9981.00451.0471.07671.0895
DEPI 1.04321.06730.99270.99090.96170.94070.98930.96830.97840.9796
SGAI 0.80750.8740.99231.02551.01251.04140.96550.94790.92950.9081
LVGI 1.05971.13951.11321.00881.01890.98960.9721.01530.98090.9841
TATA 0.01650.0246-0.0135-0.0196-0.0404-0.0654-0.0707-0.0739-0.0689-0.0534
M-score -2.28-2.31-2.57-2.50-2.57-2.62-2.63-2.73-2.74-2.72
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