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BHP Billiton Ltd (NYSE:BHP)
Beneish M-Score
-3.43 (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.

BHP Billiton Ltd has a M-score of -3.58 suggests that the company is not a manipulator.

BHP' s Beneish M-Score Range Over the Past 10 Years
Min: -12.64   Max: -1.85
Current: -3.43

-12.64
-1.85

During the past 13 years, the highest Beneish M-Score of BHP Billiton Ltd was -1.85. The lowest was -12.64. And the median was -2.75.


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 BHP Billiton Ltd 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 * 0.8208+0.528 * 1.0513+0.404 * 0.8453+0.892 * 0.7864+0.115 * 0.7466
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1731+4.679 * -0.1373-0.327 * 1.0253
=-3.58

* 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 $2,982 Mil.
Revenue was $44,636 Mil.
Gross Profit was $29,737 Mil.
Total Current Assets was $16,369 Mil.
Total Assets was $124,580 Mil.
Property, Plant and Equipment(Net PPE) was $94,072 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,158 Mil.
Selling, General & Admin. Expense(SGA) was $5,607 Mil.
Total Current Liabilities was $12,853 Mil.
Long-Term Debt was $27,969 Mil.
Net Income was $1,910 Mil.
Non Operating Income was $-284 Mil.
Cash Flow from Operations was $19,296 Mil.
Accounts Receivable was $4,620 Mil.
Revenue was $56,762 Mil.
Gross Profit was $39,755 Mil.
Total Current Assets was $22,296 Mil.
Total Assets was $151,413 Mil.
Property, Plant and Equipment(Net PPE) was $108,787 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,716 Mil.
Selling, General & Admin. Expense(SGA) was $6,078 Mil.
Total Current Liabilities was $18,064 Mil.
Long-Term Debt was $30,327 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)
=(2982 / 44636) / (4620 / 56762)
=0.06680706 / 0.08139248
=0.8208

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)
=(39755 / 56762) / (29737 / 44636)
=0.70038054 / 0.66621113
=1.0513

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 - (16369 + 94072) / 124580) / (1 - (22296 + 108787) / 151413)
=0.11349334 / 0.13426852
=0.8453

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
=44636 / 56762
=0.7864

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))
=(7716 / (7716 + 108787)) / (9158 / (9158 + 94072))
=0.06623005 / 0.08871452
=0.7466

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)
=(5607 / 44636) / (6078 / 56762)
=0.12561609 / 0.10707868
=1.1731

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)
=((27969 + 12853) / 124580) / ((30327 + 18064) / 151413)
=0.32767699 / 0.31959607
=1.0253

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
=(1910 - -284 - 19296) / 124580
=-0.1373

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.

BHP Billiton Ltd has a M-score of -3.58 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.

BHP Billiton Ltd Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.05631.34070.54851.26930.90310.79231.22320.99290.82081.8023
GMI 1.01121.2071.06480.91010.92161.07510.91330.98351.05130.6662
AQI 0.48621.04921.00020.99531.0281.11481.34520.95050.84531.2788
SGI 1.19261.23660.84431.05151.35870.98240.76421.05390.78640.6925
DEPI 1.27120.86290.9690.92771.14241.09161.11160.85910.74660.9489
SGAI 0.8940.43451.25640.98680.94820.78881.22330.92171.17310
LVGI 1.05710.94051.01980.86831.04161.16080.9570.92211.02531.1316
TATA -0.0414-0.0319-0.1649-0.0426-0.0581-0.0727-0.0603-0.073-0.1373-0.1404
M-score -2.62-1.87-3.83-2.40-2.54-2.95-2.68-2.79-3.58-2.61
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