Switch to:
Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

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

-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 * 0.747+0.528 * 1.2075+0.404 * 1.0969+0.892 * 0.92+0.115 * 0.905
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0314+4.679 * -0.1089-0.327 * 0.8979
=-3.13

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $3,684 Mil.
Revenue was 3968 + 4594 + 6635 + 6250 = $21,447 Mil.
Gross Profit was 353 + 252 + 1461 + 1143 = $3,209 Mil.
Total Current Assets was $9,938 Mil.
Total Assets was $26,018 Mil.
Property, Plant and Equipment(Net PPE) was $8,366 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,817 Mil.
Selling, General & Admin. Expense(SGA) was $1,242 Mil.
Total Current Liabilities was $3,114 Mil.
Long-Term Debt was $3,904 Mil.
Net Income was -188 + -589 + 663 + 375 = $261 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 581 + 256 + 1199 + 1058 = $3,094 Mil.
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.



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)
=(3684 / 21447) / (5361 / 23313)
=0.17177228 / 0.22995753
=0.747

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)
=(252 / 23313) / (353 / 21447)
=0.18067173 / 0.14962466
=1.2075

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 - (9938 + 8366) / 26018) / (1 - (11547 + 9087) / 28277)
=0.29648705 / 0.27029034
=1.0969

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
=21447 / 23313
=0.92

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))
=(1750 / (1750 + 9087)) / (1817 / (1817 + 8366))
=0.16148381 / 0.17843465
=0.905

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)
=(1242 / 21447) / (1309 / 23313)
=0.0579102 / 0.05614893
=1.0314

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)
=((3904 + 3114) / 26018) / ((3900 + 4595) / 28277)
=0.26973634 / 0.30042084
=0.8979

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
=(261 - 0 - 3094) / 26018
=-0.1089

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 -3.13 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.99181.04461.06321.01920.95990.94680.95180.96060.8260.747
GMI 1.24381.29141.20181.10031.04950.94240.93860.87070.99161.2075
AQI 0.9320.94940.99930.95520.97460.97720.99910.9891.04791.0969
SGI 1.01830.9981.00451.0471.07671.08951.08921.09781.0240.92
DEPI 0.96170.94070.98930.96830.97840.97960.96170.9450.90340.905
SGAI 1.01251.04140.96550.94790.92950.90810.93670.88650.9541.0314
LVGI 1.01890.98960.9721.01530.98090.98411.01680.97930.94170.8979
TATA -0.0404-0.0654-0.0707-0.0739-0.0689-0.0534-0.0507-0.0428-0.0781-0.1089
M-score -2.57-2.62-2.63-2.73-2.74-2.72-2.71-2.68-2.95-3.13
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK