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Canon Inc (NYSE:CAJ)
Beneish M-Score
-2.96 (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.

Canon Inc has a M-score of -3.13 suggests that the company is not a manipulator.

CAJ' s 10-Year Beneish M-Score Range
Min: -3.65   Max: -2.58
Current: -2.96

-3.65
-2.58

During the past 13 years, the highest Beneish M-Score of Canon Inc was -2.58. The lowest was -3.65. And the median was -2.79.


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 Canon 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 * 0.9695+0.528 * 0.964+0.404 * 1.1211+0.892 * 0.9153+0.115 * 0.8401
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0306+4.679 * -0.1149-0.327 * 1.0326
=-3.13

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $5,089 Mil.
Revenue was 8882.89210909 + 8119.17446198 + 9080.63556885 + 8484.58080907 = $34,567 Mil.
Gross Profit was 4316.12266841 + 4016.41320466 + 4737.37273779 + 4216.16181356 = $17,286 Mil.
Total Current Assets was $20,046 Mil.
Total Assets was $37,383 Mil.
Property, Plant and Equipment(Net PPE) was $10,639 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,984 Mil.
Selling, General & Admin. Expense(SGA) was $11,029 Mil.
Total Current Liabilities was $7,722 Mil.
Long-Term Debt was $10 Mil.
Net Income was 570.634570113 + 542.225929177 + 792.138965285 + 465.213992574 = $2,370 Mil.
Non Operating Income was 53.8285481545 + 61.6798401127 + 41.5822007801 + -48.3584131327 = $109 Mil.
Cash Flow from Operations was 1553.5691688 + 3710.00607862 + 0 + 1292.30017588 = $6,556 Mil.
Accounts Receivable was $5,734 Mil.
Revenue was 10000.947226 + 9204.20320532 + 9943.74453643 + 8617.21008758 = $37,766 Mil.
Gross Profit was 4716.97274309 + 4506.92470517 + 4909.32277472 + 4072.1008758 = $18,205 Mil.
Total Current Assets was $22,095 Mil.
Total Assets was $41,008 Mil.
Property, Plant and Equipment(Net PPE) was $12,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,787 Mil.
Selling, General & Admin. Expense(SGA) was $11,692 Mil.
Total Current Liabilities was $8,199 Mil.
Long-Term Debt was $14 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)
=(5088.68762429 / 34567.282949) / (5734.39010246 / 37766.1050553)
=0.1472111 / 0.1518396
=0.9695

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)
=(4016.41320466 / 37766.1050553) / (4316.12266841 / 34567.282949)
=0.48205451 / 0.50007027
=0.964

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 - (20045.8167013 + 10639.4057154) / 37382.6235111) / (1 - (22094.9352407 + 12359.6559057) / 41008.2157355)
=0.17915813 / 0.15981248
=1.1211

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
=34567.282949 / 37766.1050553
=0.9153

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))
=(2787.11611187 / (2787.11611187 + 12359.6559057)) / (2984.04475783 / (2984.04475783 + 10639.4057154))
=0.18400727 / 0.21903737
=0.8401

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)
=(11029.3524084 / 34567.282949) / (11692.3766838 / 37766.1050553)
=0.31906912 / 0.30959975
=1.0306

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)
=((9.62092064165 + 7721.70229955) / 37382.6235111) / ((13.9957471487 + 8199.37173787) / 41008.2157355)
=0.20681596 / 0.2002859
=1.0326

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
=(2370.21345715 - 108.732175915 - 6555.87542331) / 37382.6235111
=-0.1149

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.

Canon Inc has a M-score of -3.13 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.

Canon Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.06890.99820.96690.82061.19250.86720.99661.06630.99481.0246
GMI 1.01970.97750.98861.05921.06430.92470.98531.02960.98380.9651
AQI 0.9840.97021.14161.15541.05461.12350.91261.03831.03141.1211
SGI 0.95181.11621.12861.12180.79541.24671.0280.90820.86840.8661
DEPI 1.02580.9580.85680.99641.011.06481.03821.05870.95991.0303
SGAI 0.98080.99410.99591.04171.0821.0321.01421.00161.04591.0307
LVGI 0.96950.95351.07540.85560.85431.10351.00920.93760.93581.0326
TATA -0.0589-0.0502-0.0734-0.069-0.124-0.1253-0.0534-0.0436-0.0663-0.0766
M-score -2.72-2.63-2.73-2.73-2.97-2.99-2.75-2.65-2.90-2.92

Canon Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.98321.01430.94281.00981.0140.98331.10050.98751.00650.9695
GMI 1.00741.02881.02211.01571.00730.98430.97390.96180.96180.964
AQI 1.02461.03831.04841.0461.03471.03141.00341.03721.08131.1211
SGI 0.96910.95480.92740.8780.88840.87860.90580.91570.91220.9153
DEPI 1.03831.01510.95920.91710.91310.95061.0431.32730.89030.8401
SGAI 0.98971.00321.041.0621.03681.04581.02251.01891.03351.0306
LVGI 0.89530.93760.8530.94840.91320.93580.99740.91660.981.0326
TATA -0.0443-0.0451-0.0552-0.0519-0.0641-0.0688-0.0856-0.0417-0.1099-0.1149
M-score -2.68-2.67-2.79-2.80-2.84-2.91-2.88-2.71-3.07-3.13
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