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Cerner Corporation (NAS:CERN)
Beneish M-Score
-2.82 (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.

Cerner Corporation has a M-score of -2.82 suggests that the company is not a manipulator.

CERN' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.75
Current: -2.82

-4.33
-1.75

During the past 13 years, the highest Beneish M-Score of Cerner Corporation was -1.75. The lowest was -4.33. 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 Cerner Corporation 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 * 0.9238+0.528 * 0.9376+0.404 * 1.0381+0.892 * 1.092+0.115 * 1.126
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1454+4.679 * -0.0721-0.327 * 0.9486
=-2.82

* 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 $583 Mil.
Revenue was 795.328 + 727.83 + 707.561 + 680.029 = $2,911 Mil.
Gross Profit was 653.212 + 608.253 + 581.761 + 552.8 = $2,396 Mil.
Total Current Assets was $1,762 Mil.
Total Assets was $4,098 Mil.
Property, Plant and Equipment(Net PPE) was $793 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $1,481 Mil.
Total Current Liabilities was $640 Mil.
Long-Term Debt was $112 Mil.
Net Income was 60.063 + 115.344 + 112.907 + 110.04 = $398 Mil.
Non Operating Income was -8.332 + 3.509 + 2.733 + 0.044 = $-2 Mil.
Cash Flow from Operations was 141.48 + 164.23 + 176.507 + 213.648 = $696 Mil.
Accounts Receivable was $578 Mil.
Revenue was 710.384 + 676.482 + 637.358 + 641.212 = $2,665 Mil.
Gross Profit was 557.273 + 526.904 + 489.858 + 483.204 = $2,057 Mil.
Total Current Assets was $1,791 Mil.
Total Assets was $3,704 Mil.
Property, Plant and Equipment(Net PPE) was $570 Mil.
Depreciation, Depletion and Amortization(DDA) was $223 Mil.
Selling, General & Admin. Expense(SGA) was $1,184 Mil.
Total Current Liabilities was $580 Mil.
Long-Term Debt was $137 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)
=(582.926 / 2910.748) / (577.848 / 2665.436)
=0.20026674 / 0.21679305
=0.9238

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)
=(608.253 / 2665.436) / (653.212 / 2910.748)
=0.77182082 / 0.82316504
=0.9376

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 - (1761.708 + 792.781) / 4098.364) / (1 - (1790.506 + 569.708) / 3704.468)
=0.37670519 / 0.3628737
=1.0381

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
=2910.748 / 2665.436
=1.092

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))
=(222.58 / (222.58 + 569.708)) / (263.538 / (263.538 + 792.781))
=0.2809332 / 0.24948713
=1.126

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)
=(1481.228 / 2910.748) / (1184.207 / 2665.436)
=0.50888225 / 0.44428266
=1.1454

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)
=((111.717 + 640.432) / 4098.364) / ((136.557 + 580.112) / 3704.468)
=0.18352421 / 0.19346071
=0.9486

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
=(398.354 - -2.046 - 695.865) / 4098.364
=-0.0721

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.

Cerner Corporation has a M-score of -2.82 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.

Cerner Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.99690.89640.96050.9811.08740.98640.93390.99180.8480.9238
GMI 0.97531.00950.98950.96710.99070.98981.0061.03421.03590.9376
AQI 0.94061.11740.93920.93371.18470.80131.39911.04741.0791.0381
SGI 1.10331.25311.18721.10291.10270.99751.10671.19081.20981.092
DEPI 0.89431.00781.0821.04430.95210.96080.97140.92191.07851.126
SGAI 0.98570.97811.03621.02930.9821.00130.98010.94950.96451.1454
LVGI 0.89221.11140.95780.82550.87310.87740.73091.13511.10450.9486
TATA -0.1082-0.1099-0.0835-0.0864-0.0492-0.0718-0.0902-0.0799-0.0852-0.0728
M-score -2.91-2.84-2.75-2.80-2.43-2.88-2.62-2.70-2.80-2.82

Cerner Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.0290.99180.92690.78380.80380.8480.83190.95260.88770.9238
GMI 1.03221.03421.0471.05521.04491.03590.99640.96750.9480.9376
AQI 1.06761.04740.99571.00051.0371.0791.13421.13231.1491.0381
SGI 1.14941.19081.23141.24611.23131.20981.14941.12521.09921.092
DEPI 0.93390.92190.94561.01181.05111.07851.10361.10181.10571.126
SGAI 0.9560.94950.94580.93780.94980.96450.99391.02821.05661.1454
LVGI 0.94551.13511.1561.11851.09591.10451.07051.07220.98170.9486
TATA -0.0761-0.0809-0.0811-0.0878-0.0939-0.0845-0.091-0.0836-0.0723-0.0721
M-score -2.61-2.70-2.75-2.87-2.87-2.80-2.88-2.78-2.79-2.82
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