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Canon, Inc. (NYSE:CAJ)
Beneish M-Score
-2.72 (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 -2.86 suggests that the company is not a manipulator.

CAJ' s 10-Year Beneish M-Score Range
Min: -3.61   Max: -2.55
Current: -2.72

-3.61
-2.55

During the past 13 years, the highest Beneish M-Score of Canon, Inc. was -2.55. The lowest was -3.61. 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 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 * 1.0341+0.528 * 0.9849+0.404 * 1.0314+0.892 * 0.8812+0.115 * 0.9938
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0457+4.679 * -0.0684-0.327 * 0.9358
=-2.86

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $5,867 Mil.
Revenue was 9971.93550563 + 9339.76679963 + 9700.5207027 + 8353.82270505 = $37,366 Mil.
Gross Profit was 4703.28928981 + 4573.30469469 + 4789.24081747 + 3947.6359991 = $18,013 Mil.
Total Current Assets was $22,031 Mil.
Total Assets was $40,889 Mil.
Property, Plant and Equipment(Net PPE) was $12,324 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,758 Mil.
Selling, General & Admin. Expense(SGA) was $11,566 Mil.
Total Current Liabilities was $8,176 Mil.
Long-Term Debt was $14 Mil.
Net Income was 619.230732163 + 601.636493812 + 667.141552878 + 418.51306287 = $2,307 Mil.
Non Operating Income was 45.6626285406 + -40.3600286386 + -10.4842836074 + 46.5537347327 = $41 Mil.
Cash Flow from Operations was 1583.60077486 + 1282.98046436 + 1630.08036279 + 566.848748951 = $5,064 Mil.
Accounts Receivable was $6,438 Mil.
Revenue was 10682.858362 + 10124.2706896 + 11391.714702 + 10205.77955 = $42,405 Mil.
Gross Profit was 4855.1730333 + 4894.82743346 + 5573.20580224 + 4810.9338847 = $20,134 Mil.
Total Current Assets was $23,381 Mil.
Total Assets was $44,415 Mil.
Property, Plant and Equipment(Net PPE) was $14,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,143 Mil.
Selling, General & Admin. Expense(SGA) was $12,553 Mil.
Total Current Liabilities was $9,482 Mil.
Long-Term Debt was $24 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)
=(5866.76111448 / 37366.045713) / (6438.22003638 / 42404.6233036)
=0.15700781 / 0.15182826
=1.0341

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)
=(4573.30469469 / 42404.6233036) / (4703.28928981 / 37366.045713)
=0.47481002 / 0.48208127
=0.9849

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 - (22030.8401037 + 12323.8018138) / 40889.2551151) / (1 - (23380.8978419 + 14152.1704956) / 44414.9093849)
=0.15981248 / 0.15494439
=1.0314

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
=37366.045713 / 42404.6233036
=0.8812

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))
=(3142.77851437 / (3142.77851437 + 14152.1704956)) / (2757.65671303 / (2757.65671303 + 12323.8018138))
=0.18171655 / 0.1828508
=0.9938

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)
=(11566.0369006 / 37366.045713) / (12552.5776692 / 42404.6233036)
=0.30953334 / 0.29601908
=1.0457

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)
=((13.9551469242 + 8175.58620291) / 40889.2551151) / ((23.7710256238 + 9481.85452177) / 44414.9093849)
=0.2002859 / 0.2140188
=0.9358

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
=(2306.52184172 - 41.3720510273 - 5063.51035095) / 40889.2551151
=-0.0684

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 -2.86 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.01931.06890.99820.96690.82061.19250.86720.99661.09930.9901
GMI 1.01831.01970.97750.98861.05921.06430.92470.98531.02960.9838
AQI 0.86130.9840.97021.14161.15541.05461.12350.91261.03831.0314
SGI 1.11070.9721.05981.20851.08940.77541.27361.03030.84530.9204
DEPI 1.05731.02580.9580.85680.99641.011.06481.03821.05870.9599
SGAI 0.71430.98080.99410.99591.04171.0821.0321.01421.00161.0459
LVGI 1.01250.96950.95351.07540.85560.85431.10351.00920.93760.9358
TATA -0.0627-0.0589-0.0502-0.0734-0.069-0.124-0.1253-0.0534-0.0436-0.0663
M-score -2.65-2.70-2.68-2.66-2.75-2.99-2.97-2.75-2.67-2.86

Canon, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.84810.98421.05650.99260.95350.98940.92711.0211.06391.0341
GMI 0.99290.98470.98950.99931.00751.02821.02131.01511.00640.9849
AQI 0.93430.91260.93260.95281.02461.03831.04841.0461.03471.0314
SGI 1.11551.04330.99971.03020.9720.93930.8960.84310.86040.8812
DEPI 0.97711.02811.03611.05591.02510.97090.95110.92540.95730.9938
SGAI 1.04931.0120.98310.9510.98941.0031.03991.06231.03741.0457
LVGI 1.04971.00921.05681.00650.89530.93760.8530.94840.91320.9358
TATA -0.0775-0.0527-0.0525-0.0572-0.045-0.047-0.0557-0.0513-0.0615-0.0684
M-score -2.94-2.75-2.72-2.73-2.71-2.72-2.83-2.82-2.80-2.86
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