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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.83 (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 Corp has a M-score of -2.83 suggests that the company is not a manipulator.

CERN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.33   Max: -1.75
Current: -2.83

-4.33
-1.75

During the past 13 years, the highest Beneish M-Score of Cerner Corp was -1.75. The lowest was -4.33. And the median was -2.75.


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 Corp 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 * 0.7982+0.528 * 0.9853+0.404 * 1.0228+0.892 * 1.2638+0.115 * 0.9039
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.051+4.679 * -0.0864-0.327 * 0.9377
=-2.83

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $902 Mil.
Revenue was 1138.135 + 1175.294 + 1127.887 + 1125.997 = $4,567 Mil.
Gross Profit was 962.542 + 976.078 + 937.304 + 933.675 = $3,810 Mil.
Total Current Assets was $1,729 Mil.
Total Assets was $5,594 Mil.
Property, Plant and Equipment(Net PPE) was $1,366 Mil.
Depreciation, Depletion and Amortization(DDA) was $471 Mil.
Selling, General & Admin. Expense(SGA) was $2,339 Mil.
Total Current Liabilities was $776 Mil.
Long-Term Debt was $554 Mil.
Net Income was 150.36 + 166.108 + 147.282 + 115.038 = $579 Mil.
Non Operating Income was 1.681 + 0.798 + 0.317 + -1.079 = $2 Mil.
Cash Flow from Operations was 327.083 + 353.095 + 271.52 + 108.664 = $1,060 Mil.
Accounts Receivable was $894 Mil.
Revenue was 996.089 + 926.031 + 840.149 + 851.762 = $3,614 Mil.
Gross Profit was 827.429 + 753.187 + 700.084 + 689.393 = $2,970 Mil.
Total Current Assets was $1,911 Mil.
Total Assets was $5,353 Mil.
Property, Plant and Equipment(Net PPE) was $1,103 Mil.
Depreciation, Depletion and Amortization(DDA) was $333 Mil.
Selling, General & Admin. Expense(SGA) was $1,761 Mil.
Total Current Liabilities was $792 Mil.
Long-Term Debt was $564 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)
=(901.892 / 4567.313) / (894.123 / 3614.031)
=0.19746665 / 0.24740325
=0.7982

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)
=(2970.093 / 3614.031) / (3809.599 / 4567.313)
=0.82182278 / 0.83410071
=0.9853

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 - (1728.638 + 1366.479) / 5594.492) / (1 - (1911.281 + 1103.4) / 5352.605)
=0.44675638 / 0.43678246
=1.0228

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
=4567.313 / 3614.031
=1.2638

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))
=(332.704 / (332.704 + 1103.4)) / (470.906 / (470.906 + 1366.479))
=0.23167124 / 0.25629141
=0.9039

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)
=(2338.992 / 4567.313) / (1761.067 / 3614.031)
=0.51211555 / 0.48728608
=1.051

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)
=((553.68 + 775.932) / 5594.492) / ((564.339 + 792.299) / 5352.605)
=0.23766447 / 0.25345379
=0.9377

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
=(578.788 - 1.717 - 1060.362) / 5594.492
=-0.0864

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 Corp has a M-score of -2.83 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 Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.96050.9811.08740.98640.93390.83190.9590.91380.96271.2427
GMI 0.98950.96710.99070.98981.0061.03421.03590.93761.0010.9904
AQI 0.93920.93371.18470.80131.39911.04741.0791.03810.73681.5708
SGI 1.18721.10291.10270.99751.10671.19081.20981.0921.1691.3005
DEPI 1.0821.04430.95210.96080.97140.92191.07851.1261.01210.9601
SGAI 1.03621.02930.9821.00130.98010.94950.96451.14540.94851.059
LVGI 0.95780.82550.87310.87740.73091.13511.10450.94860.83851.567
TATA -0.0835-0.0864-0.0492-0.0718-0.0902-0.0799-0.0852-0.0728-0.0707-0.0734
M-score -2.75-2.80-2.43-2.88-2.62-2.85-2.70-2.83-2.74-2.31

Cerner Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.91380.98031.02341.0120.96271.41891.35051.3681.24270.7982
GMI 0.93760.94910.96940.9871.0011.00840.99790.99780.99040.9853
AQI 1.03810.89830.92740.74310.73681.27931.26951.58861.57081.0228
SGI 1.0921.11511.13881.15791.1691.19851.23061.27631.30051.2638
DEPI 1.1261.11911.05831.03861.01211.05771.00930.95370.96010.9039
SGAI 1.13551.13641.11091.08330.95080.95450.99470.99951.06561.051
LVGI 0.94860.90920.93810.95650.83851.48271.3611.4821.5670.9377
TATA -0.0755-0.0578-0.0698-0.077-0.0734-0.0742-0.0488-0.0542-0.0734-0.0864
M-score -2.84-2.71-2.70-2.79-2.75-2.29-2.19-2.07-2.31-2.83
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