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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

CERN' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.75
Current: -2.74

-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 * 0.9627+0.528 * 1.001+0.404 * 0.7368+0.892 * 1.169+0.115 * 1.0121
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9485+4.679 * -0.0707-0.327 * 0.8385
=-2.74

* 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 $616 Mil.
Revenue was 926.031 + 840.149 + 851.762 + 784.761 = $3,403 Mil.
Gross Profit was 753.187 + 700.084 + 689.393 + 655.662 = $2,798 Mil.
Total Current Assets was $2,349 Mil.
Total Assets was $4,531 Mil.
Property, Plant and Equipment(Net PPE) was $924 Mil.
Depreciation, Depletion and Amortization(DDA) was $302 Mil.
Selling, General & Admin. Expense(SGA) was $1,642 Mil.
Total Current Liabilities was $634 Mil.
Long-Term Debt was $63 Mil.
Net Income was 147.872 + 129.002 + 129.033 + 119.526 = $525 Mil.
Non Operating Income was -9.167 + 2.181 + 2.737 + 2.99 = $-1 Mil.
Cash Flow from Operations was 223.448 + 219.521 + 248.271 + 155.787 = $847 Mil.
Accounts Receivable was $547 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.



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)
=(615.629 / 3402.703) / (547.026 / 2910.748)
=0.18092352 / 0.18793314
=0.9627

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)
=(700.084 / 2910.748) / (753.187 / 3402.703)
=0.82316504 / 0.82238326
=1.001

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 - (2348.786 + 924.26) / 4530.565) / (1 - (1761.708 + 792.781) / 4098.364)
=0.27756339 / 0.37670519
=0.7368

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
=3402.703 / 2910.748
=1.169

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))
=(263.538 / (263.538 + 792.781)) / (302.353 / (302.353 + 924.26))
=0.24948713 / 0.24649421
=1.0121

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)
=(1642.437 / 3402.703) / (1481.228 / 2910.748)
=0.48268597 / 0.50888225
=0.9485

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)
=((62.868 + 634.315) / 4530.565) / ((111.717 + 640.432) / 4098.364)
=0.15388434 / 0.18352421
=0.8385

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
=(525.433 - -1.259 - 847.027) / 4530.565
=-0.0707

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 -2.74 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.89640.96050.9811.08740.98640.93390.83190.9590.91380.9627
GMI 1.00950.98950.96710.99070.98981.0061.03421.03590.93761.001
AQI 1.11740.93920.93371.18470.80131.39911.04741.0791.03810.7368
SGI 1.25311.18721.10291.10270.99751.10671.19081.20981.0921.169
DEPI 1.00781.0821.04430.95210.96080.97140.92191.07851.1261.0121
SGAI 0.97811.03621.02930.9821.00130.98010.94950.96451.14540.9485
LVGI 1.11140.95780.82550.87310.87740.73091.13511.10450.94860.8385
TATA -0.1099-0.0835-0.0864-0.0492-0.0718-0.0902-0.0799-0.0852-0.0728-0.0707
M-score -2.84-2.75-2.80-2.43-2.88-2.62-2.85-2.70-2.83-2.74

Cerner Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.83350.9590.92980.9830.98590.91380.98031.02341.0120.9627
GMI 1.04491.03590.99640.96750.9480.93760.94910.96940.9871.001
AQI 1.0371.0791.13421.13231.1491.03810.89830.92740.74310.7368
SGI 1.23131.20981.14941.12521.09921.0921.11511.13881.15791.169
DEPI 1.05111.07851.10361.10181.10571.1261.11911.05831.03861.0121
SGAI 0.94980.96450.99391.02821.05661.14541.14591.1221.09620.9485
LVGI 1.09591.10451.07051.07220.98170.94860.90920.93810.95650.8385
TATA -0.0939-0.0845-0.0918-0.0843-0.0731-0.0728-0.0551-0.0672-0.0744-0.0707
M-score -2.84-2.69-2.80-2.76-2.71-2.83-2.70-2.69-2.78-2.74
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