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Baker Hughes Inc (NYSE:BHI)
Beneish M-Score
-3.07 (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 -3.07 suggests that the company is not a manipulator.

BHI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -1.35
Current: -3.07

-3.08
-1.35

During the past 13 years, the highest Beneish M-Score of Baker Hughes Inc was -1.35. The lowest was -3.08. And the median was -2.60.


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 * 0.7955+0.528 * 1.4077+0.404 * 1.1348+0.892 * 0.7984+0.115 * 0.8979
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1352+4.679 * -0.1077-0.327 * 0.8671
=-3.07

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $3,518 Mil.
Revenue was 3786 + 3968 + 4594 + 6635 = $18,983 Mil.
Gross Profit was 383 + 353 + 252 + 1461 = $2,449 Mil.
Total Current Assets was $9,586 Mil.
Total Assets was $25,416 Mil.
Property, Plant and Equipment(Net PPE) was $8,026 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,794 Mil.
Selling, General & Admin. Expense(SGA) was $1,190 Mil.
Total Current Liabilities was $2,918 Mil.
Long-Term Debt was $3,896 Mil.
Net Income was -159 + -188 + -589 + 663 = $-273 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 428 + 581 + 256 + 1199 = $2,464 Mil.
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.



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)
=(3518 / 18983) / (5539 / 23776)
=0.18532371 / 0.23296602
=0.7955

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)
=(353 / 23776) / (383 / 18983)
=0.18161171 / 0.12901017
=1.4077

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 - (9586 + 8026) / 25416) / (1 - (11811 + 9081) / 28642)
=0.30705068 / 0.27058166
=1.1348

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
=18983 / 23776
=0.7984

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))
=(1782 / (1782 + 9081)) / (1794 / (1794 + 8026))
=0.16404308 / 0.18268839
=0.8979

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)
=(1190 / 18983) / (1313 / 23776)
=0.06268767 / 0.05522376
=1.1352

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)
=((3896 + 2918) / 25416) / ((3894 + 4962) / 28642)
=0.26809884 / 0.30919629
=0.8671

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
=(-273 - 0 - 2464) / 25416
=-0.1077

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 -3.07 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.06321.01920.95990.94680.95180.96060.8260.7470.79550.926
GMI 1.20181.10031.04950.94240.93860.87070.99161.20751.40772.4846
AQI 0.99930.95520.97460.97720.99910.9891.04791.09691.13481.2592
SGI 1.00451.0471.07671.08951.08921.09781.0240.920.79840.6412
DEPI 0.98930.96830.97840.97960.96170.9450.90340.9050.89790.8075
SGAI 0.96550.94790.92950.90810.93670.88650.9541.03141.13521.4393
LVGI 0.9721.01530.98090.98411.01680.97930.94170.89790.86710.9332
TATA -0.0707-0.0739-0.0689-0.0534-0.0507-0.0428-0.0781-0.1089-0.1077-0.1563
M-score -2.63-2.73-2.74-2.72-2.71-2.68-2.95-3.13-3.07-2.79
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