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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: -6.8   Max: -2.21
Current: -2.78

-6.8
-2.21

During the past 13 years, the highest Beneish M-Score of BHP Billiton Ltd was -2.21. The lowest was -6.80. And the median was -2.78.


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 * 1.0269+0.528 * 0.9676+0.404 * 0.9505+0.892 * 1.019+0.115 * 0.8824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9451+4.679 * -0.0718-0.327 * 0.9221
=-2.79

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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 $6,903 Mil.
Total Current Liabilities was $18,064 Mil.
Long-Term Debt was $30,327 Mil.
Net Income was $13,832 Mil.
Non Operating Income was $-656 Mil.
Cash Flow from Operations was $25,364 Mil.
Accounts Receivable was $4,415 Mil.
Revenue was $65,953 Mil.
Gross Profit was $41,610 Mil.
Total Current Assets was $18,953 Mil.
Total Assets was $139,178 Mil.
Property, Plant and Equipment(Net PPE) was $100,565 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,031 Mil.
Selling, General & Admin. Expense(SGA) was $7,168 Mil.
Total Current Liabilities was $20,139 Mil.
Long-Term Debt was $28,099 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)
=(4620 / 67206) / (4415 / 65953)
=0.06874386 / 0.06694161
=1.0269

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)
=( / 65953) / ( / 67206)
=0.63090383 / 0.65204
=0.9676

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 - (22296 + 108787) / 151413) / (1 - (18953 + 100565) / 139178)
=0.13426852 / 0.14125796
=0.9505

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
=67206 / 65953
=1.019

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))
=(7031 / (7031 + 100565)) / (8701 / (8701 + 108787))
=0.0653463 / 0.07405863
=0.8824

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)
=(6903 / 67206) / (7168 / 65953)
=0.10271404 / 0.10868346
=0.9451

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)
=((30327 + 18064) / 151413) / ((28099 + 20139) / 139178)
=0.31959607 / 0.34659213
=0.9221

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
=(13832 - -656 - 25364) / 151413
=-0.0718

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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.68170.8341.45411.34070.54851.28210.89410.77311.02371.0269
GMI 1.00250.63471.01120.96640.99150.86661.29831.07240.99970.9676
AQI 1.46591.07210.48621.04921.00020.99530.96971.18171.34520.9505
SGI 1.16761.50921.19261.23660.84431.0411.37251.00680.91311.019
DEPI 1.29450.78331.27120.86290.9690.92771.15061.08750.96470.8824
SGAI 0.62822.13370.8941.03641.25441.35510.28991.19010.75850.9451
LVGI 1.14470.88441.05710.94051.01980.86831.04221.16010.9570.9221
TATA -0.0872-0.018-0.0414-0.0665-0.1649-0.0469-0.0581-0.0662-0.0594-0.0718
M-score -2.79-2.61-2.26-2.27-3.86-2.50-2.25-2.96-2.62-2.79
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