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BHP Billiton Ltd (NYSE:BHP)
Beneish M-Score
0.00 (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 -3.57 suggests that the company is not a manipulator.

During the past 13 years, the highest Beneish M-Score of BHP Billiton Ltd was 0.00. The lowest was 0.00. And the median was 0.00.


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 * 0.9718+0.528 * 0.9787+0.404 * 0.8453+0.892 * 0.6642+0.115 * 0.8348
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1018+4.679 * -0.1373-0.327 * 1.0253
=-3.57

* 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 $67,206 Mil.
Gross Profit was $43,821 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 $8,701 Mil.
Selling, General & Admin. Expense(SGA) was $7,662 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 / 67206)
=0.06680706 / 0.06874386
=0.9718

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)
=(43821 / 67206) / (29737 / 44636)
=0.65204 / 0.66621113
=0.9787

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 / 67206
=0.6642

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))
=(8701 / (8701 + 108787)) / (9158 / (9158 + 94072))
=0.07405863 / 0.08871452
=0.8348

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) / (7662 / 67206)
=0.12561609 / 0.11400768
=1.1018

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 -3.57 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

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 1.11031.02551.08920.55451.26930.90310.77311.02351.02720.9718
GMI 0.64490.9630.73741.31270.92340.90831.07241.01880.94940.9787
AQI 1.07210.48621.04921.00020.99531.0281.11481.34520.95050.8453
SGI 1.08671.22841.52210.83521.05151.35871.00680.91341.01880.6642
DEPI 0.89461.25670.76420.9690.92771.14241.09530.97580.87230.8348
SGAI 18.52370.95582.19970.50920.98680.94821.19011.14950.69221.1018
LVGI 0.88441.05710.94051.01980.86831.04161.16080.9570.92211.0253
TATA -0.0005-0.0355-0.0364-0.1649-0.0585-0.0581-0.0662-0.0482-0.0718-0.1373
M-score -5.45-2.63-2.44-3.57-2.47-2.55-2.98-2.63-2.76-3.57
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