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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

CERN' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.75
Current: -2.78

-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 -2.76.


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 * 1.012+0.528 * 0.987+0.404 * 0.7431+0.892 * 1.1579+0.115 * 1.0386
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0962+4.679 * -0.0744-0.327 * 0.9565
=-2.78

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $580 Mil.
Revenue was 840.149 + 851.762 + 784.761 + 795.328 = $3,272 Mil.
Gross Profit was 700.084 + 689.393 + 655.662 + 653.212 = $2,698 Mil.
Total Current Assets was $2,235 Mil.
Total Assets was $4,393 Mil.
Property, Plant and Equipment(Net PPE) was $889 Mil.
Depreciation, Depletion and Amortization(DDA) was $291 Mil.
Selling, General & Admin. Expense(SGA) was $1,678 Mil.
Total Current Liabilities was $671 Mil.
Long-Term Debt was $87 Mil.
Net Income was 129.002 + 129.033 + 119.526 + 60.063 = $438 Mil.
Non Operating Income was 2.181 + 2.737 + 2.99 + -8.332 = $-0 Mil.
Cash Flow from Operations was 219.521 + 248.271 + 155.787 + 141.48 = $765 Mil.
Accounts Receivable was $495 Mil.
Revenue was 727.83 + 707.561 + 680.029 + 710.384 = $2,826 Mil.
Gross Profit was 608.253 + 581.761 + 552.8 + 557.273 = $2,300 Mil.
Total Current Assets was $1,701 Mil.
Total Assets was $3,966 Mil.
Property, Plant and Equipment(Net PPE) was $725 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $1,322 Mil.
Total Current Liabilities was $584 Mil.
Long-Term Debt was $131 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)
=(579.697 / 3272) / (494.715 / 2825.804)
=0.17716901 / 0.17507053
=1.012

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)
=(689.393 / 2825.804) / (700.084 / 3272)
=0.81395843 / 0.8246794
=0.987

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 - (2235.477 + 889.487) / 4392.638) / (1 - (1701.094 + 724.886) / 3966.37)
=0.28859059 / 0.38836266
=0.7431

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
=3272 / 2825.804
=1.1579

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))
=(249.704 / (249.704 + 724.886)) / (291.29 / (291.29 + 889.487))
=0.25621441 / 0.24669349
=1.0386

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)
=(1678.472 / 3272) / (1322.413 / 2825.804)
=0.51298044 / 0.46797761
=1.0962

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)
=((86.756 + 671.12) / 4392.638) / ((131.03 + 584.44) / 3966.37)
=0.17253322 / 0.18038408
=0.9565

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
=(437.624 - -0.424 - 765.059) / 4392.638
=-0.0744

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 -2.78 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.99690.89640.96050.9811.08740.98640.93390.83190.9590.9138
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 -2.91-2.84-2.75-2.80-2.43-2.88-2.62-2.85-2.70-2.83

Cerner Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.71190.83350.9590.92980.9830.98590.91380.98031.02341.012
GMI 1.05521.04491.03590.99640.96750.9480.93760.94910.96940.987
AQI 1.00051.0371.0791.13421.13231.1491.03810.89830.92740.7431
SGI 1.24611.23131.20981.14941.12521.09921.0921.11511.13881.1579
DEPI 1.01181.05111.07851.10361.10181.10571.1261.11911.05831.0386
SGAI 0.93780.94980.96450.99391.02821.05661.14541.14591.1221.0962
LVGI 1.11851.09591.10451.07051.07220.98170.94860.90920.93810.9565
TATA -0.0878-0.0939-0.0845-0.0918-0.0843-0.0731-0.0728-0.0551-0.0672-0.0744
M-score -2.93-2.84-2.69-2.80-2.76-2.71-2.83-2.70-2.69-2.78
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