Switch to:
BHP Billiton Ltd (NYSE:BHP)
Beneish M-Score
-2.78 (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 -2.79 suggests that the company is not a manipulator.

BHP' s 10-Year Beneish M-Score Range
Min: -6.92   Max: -2.16
Current: -2.78

-6.92
-2.16

During the past 13 years, the highest Beneish M-Score of BHP Billiton Ltd was -2.16. The lowest was -6.92. And the median was -2.72.


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 * 0.9851+0.528 * 1.0188+0.404 * 1.0616+0.892 * 0.9134+0.115 * 0.9973
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1495+4.679 * -0.0485-0.327 * 1.004
=-2.79

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

This Year (Jun13) TTM:Last Year (Jun12) TTM:
Accounts Receivable was $7,055 Mil.
Revenue was $65,968 Mil.
Gross Profit was $40,839 Mil.
Total Current Assets was $19,786 Mil.
Total Assets was $138,109 Mil.
Property, Plant and Equipment(Net PPE) was $102,927 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,945 Mil.
Selling, General & Admin. Expense(SGA) was $10,865 Mil.
Total Current Liabilities was $20,372 Mil.
Long-Term Debt was $29,847 Mil.
Net Income was $10,876 Mil.
Non Operating Income was $-672 Mil.
Cash Flow from Operations was $18,252 Mil.
Accounts Receivable was $7,841 Mil.
Revenue was $72,226 Mil.
Gross Profit was $45,555 Mil.
Total Current Assets was $20,451 Mil.
Total Assets was $129,273 Mil.
Property, Plant and Equipment(Net PPE) was $95,247 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,408 Mil.
Selling, General & Admin. Expense(SGA) was $10,349 Mil.
Total Current Liabilities was $22,034 Mil.
Long-Term Debt was $24,784 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)
=(7055 / 65968) / (7841 / 72226)
=0.10694579 / 0.10856201
=0.9851

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)
=( / 72226) / ( / 65968)
=0.63072855 / 0.61907288
=1.0188

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 - (19786 + 102927) / 138109) / (1 - (20451 + 95247) / 129273)
=0.11147717 / 0.10501033
=1.0616

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
=65968 / 72226
=0.9134

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))
=(6408 / (6408 + 95247)) / (6945 / (6945 + 102927))
=0.06303674 / 0.06320992
=0.9973

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)
=(10865 / 65968) / (10349 / 72226)
=0.16470107 / 0.14328635
=1.1495

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)
=((29847 + 20372) / 138109) / ((24784 + 22034) / 129273)
=0.36361859 / 0.36216379
=1.004

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
=(10876 - -672 - 18252) / 138109
=-0.0485

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 -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.

BHP Billiton Ltd Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 0.87020.97890.79951.36561.28580.66591.15960.91670.91950.9851
GMI 2.13161.00250.63471.01120.96640.99150.86661.29831.07241.0188
AQI 0.88041.46591.07210.48621.04921.00020.99530.96971.18171.0616
SGI 1.46641.16761.50921.19261.23660.84431.0411.37251.00680.9134
DEPI 0.99771.29450.78331.27120.86290.9690.92771.15061.08750.9973
SGAI 0.26170.62822.13370.8941.03641.25441.35510.28991.19011.1495
LVGI 1.7571.14470.88441.05710.94051.01980.86831.04221.16011.004
TATA -0.0857-0.0872-0.018-0.0414-0.0665-0.1649-0.0469-0.0581-0.0662-0.0485
M-score -2.16-2.52-2.64-2.34-2.32-3.76-2.61-2.23-2.82-2.79
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)
Free 7-day Trial
FEEDBACK
Hide