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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.22 (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 -2.07 signals that the company is a manipulator.

CERN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.33   Max: -1.75
Current: -2.22

-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 -2.74.


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 * 1.368+0.528 * 0.9978+0.404 * 1.5886+0.892 * 1.2763+0.115 * 0.9537
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0067+4.679 * -0.052-0.327 * 1.482
=-2.07

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,012 Mil.
Revenue was 1127.887 + 1125.997 + 996.089 + 926.031 = $4,176 Mil.
Gross Profit was 937.304 + 933.675 + 827.429 + 753.187 = $3,452 Mil.
Total Current Assets was $1,804 Mil.
Total Assets was $5,523 Mil.
Property, Plant and Equipment(Net PPE) was $1,187 Mil.
Depreciation, Depletion and Amortization(DDA) was $414 Mil.
Selling, General & Admin. Expense(SGA) was $2,148 Mil.
Total Current Liabilities was $839 Mil.
Long-Term Debt was $573 Mil.
Net Income was 147.282 + 115.038 + 110.934 + 147.872 = $521 Mil.
Non Operating Income was 0.317 + -1.079 + 0.208 + -9.167 = $-10 Mil.
Cash Flow from Operations was 271.52 + 108.664 + 214.247 + 223.448 = $818 Mil.
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 $1,672 Mil.
Total Current Liabilities was $671 Mil.
Long-Term Debt was $87 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)
=(1012.146 / 4176.004) / (579.697 / 3272)
=0.24237189 / 0.17716901
=1.368

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)
=(933.675 / 3272) / (937.304 / 4176.004)
=0.8246794 / 0.82653058
=0.9978

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 - (1803.762 + 1187.114) / 5522.925) / (1 - (2235.477 + 889.487) / 4392.638)
=0.45846159 / 0.28859059
=1.5886

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
=4176.004 / 3272
=1.2763

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))
=(291.29 / (291.29 + 889.487)) / (414.216 / (414.216 + 1187.114))
=0.24669349 / 0.25866998
=0.9537

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)
=(2147.863 / 4176.004) / (1671.633 / 3272)
=0.51433452 / 0.51089028
=1.0067

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)
=((572.828 + 839.335) / 5522.925) / ((86.756 + 671.12) / 4392.638)
=0.25569114 / 0.17253322
=1.482

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
=(521.126 - -9.721 - 817.879) / 5522.925
=-0.052

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 -2.07 signals that the company is likely to 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.9830.98590.91380.98031.02341.0120.96271.41891.35051.368
GMI 0.96750.9480.93760.94910.96940.9871.0011.00840.99790.9978
AQI 1.13231.1491.03810.89830.92740.74310.73681.27931.26951.5886
SGI 1.12521.09921.0921.11511.13881.15791.1691.19851.23061.2763
DEPI 1.10181.10571.1261.11911.05831.03861.01211.05771.00930.9537
SGAI 1.02821.05661.14541.14591.11971.09170.95040.96371.00281.0067
LVGI 1.07220.98170.94860.90920.93810.95650.83851.48271.3611.482
TATA -0.0843-0.0731-0.0728-0.0551-0.0672-0.0744-0.0707-0.0719-0.0465-0.052
M-score -2.76-2.71-2.83-2.70-2.69-2.78-2.74-2.28-2.18-2.07
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