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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.31 (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 -2.31 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: -2.31

-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 * 1.2427+0.528 * 0.9904+0.404 * 1.5708+0.892 * 1.3005+0.115 * 0.9601
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0742+4.679 * -0.0734-0.327 * 1.567
=-2.31

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $995 Mil.
Revenue was 1175.294 + 1127.887 + 1125.997 + 996.089 = $4,425 Mil.
Gross Profit was 976.078 + 937.304 + 933.675 + 827.429 = $3,674 Mil.
Total Current Assets was $1,828 Mil.
Total Assets was $5,562 Mil.
Property, Plant and Equipment(Net PPE) was $1,309 Mil.
Depreciation, Depletion and Amortization(DDA) was $452 Mil.
Selling, General & Admin. Expense(SGA) was $2,280 Mil.
Total Current Liabilities was $778 Mil.
Long-Term Debt was $563 Mil.
Net Income was 166.108 + 147.282 + 115.038 + 110.934 = $539 Mil.
Non Operating Income was 0.798 + 0.317 + -1.079 + 0.208 = $0 Mil.
Cash Flow from Operations was 353.095 + 271.52 + 108.664 + 214.247 = $948 Mil.
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 $1,632 Mil.
Total Current Liabilities was $634 Mil.
Long-Term Debt was $63 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)
=(994.95 / 4425.267) / (615.629 / 3402.703)
=0.22483389 / 0.18092352
=1.2427

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)
=(937.304 / 3402.703) / (976.078 / 4425.267)
=0.82238326 / 0.83034221
=0.9904

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 - (1827.833 + 1309.214) / 5561.984) / (1 - (2348.786 + 924.26) / 4530.565)
=0.43598417 / 0.27756339
=1.5708

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
=4425.267 / 3402.703
=1.3005

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))
=(302.353 / (302.353 + 924.26)) / (452.225 / (452.225 + 1309.214))
=0.24649421 / 0.25673611
=0.9601

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)
=(2280.277 / 4425.267) / (1632.188 / 3402.703)
=0.51528574 / 0.47967395
=1.0742

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)
=((563.353 + 777.866) / 5561.984) / ((62.868 + 634.315) / 4530.565)
=0.24114039 / 0.15388434
=1.567

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
=(539.362 - 0.244 - 947.526) / 5561.984
=-0.0734

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 -2.31 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98590.91380.98031.02341.0120.96271.41891.35051.3681.2427
GMI 0.9480.93760.94910.96940.9871.0011.00840.99790.99780.9904
AQI 1.1491.03810.89830.92740.74310.73681.27931.26951.58861.5708
SGI 1.09921.0921.11511.13881.15791.1691.19851.23061.27631.3005
DEPI 1.10571.1261.11911.05831.03861.01211.05771.00930.95370.9601
SGAI 1.05661.13551.13641.11091.08330.95080.96441.00391.00811.0742
LVGI 0.98170.94860.90920.93810.95650.83851.48271.3611.4821.567
TATA -0.076-0.0755-0.0578-0.0698-0.077-0.0734-0.0742-0.0488-0.0542-0.0734
M-score -2.72-2.84-2.71-2.70-2.79-2.75-2.29-2.19-2.08-2.31
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