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Cerner Corp (NAS:CERN)
Beneish M-Score
-2.94 (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 -2.94 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: -2.94

-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 * 0.832+0.528 * 0.9862+0.404 * 0.9072+0.892 * 1.1288+0.115 * 1.0308
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9885+4.679 * -0.0886-0.327 * 0.8968
=-2.94

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $951 Mil.
Revenue was 1184.557 + 1215.962 + 1138.135 + 1175.294 = $4,714 Mil.
Gross Profit was 1001.587 + 1010.406 + 962.542 + 976.078 = $3,951 Mil.
Total Current Assets was $1,998 Mil.
Total Assets was $5,949 Mil.
Property, Plant and Equipment(Net PPE) was $1,476 Mil.
Depreciation, Depletion and Amortization(DDA) was $495 Mil.
Selling, General & Admin. Expense(SGA) was $2,385 Mil.
Total Current Liabilities was $828 Mil.
Long-Term Debt was $536 Mil.
Net Income was 169.979 + 166.454 + 150.36 + 166.108 = $653 Mil.
Non Operating Income was -0.417 + 2.47 + 1.681 + 0.798 = $5 Mil.
Cash Flow from Operations was 240.349 + 254.942 + 327.083 + 353.095 = $1,175 Mil.
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 $2,138 Mil.
Total Current Liabilities was $839 Mil.
Long-Term Debt was $573 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)
=(950.549 / 4713.948) / (1012.146 / 4176.004)
=0.20164605 / 0.24237189
=0.832

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)
=(3451.595 / 4176.004) / (3950.613 / 4713.948)
=0.82653058 / 0.83806885
=0.9862

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 - (1998.315 + 1476.126) / 5948.527) / (1 - (1803.762 + 1187.114) / 5522.925)
=0.41591574 / 0.45846159
=0.9072

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
=4713.948 / 4176.004
=1.1288

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))
=(414.216 / (414.216 + 1187.114)) / (494.535 / (494.535 + 1476.126))
=0.25866998 / 0.25094879
=1.0308

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)
=(2385.46 / 4713.948) / (2137.797 / 4176.004)
=0.50604292 / 0.51192408
=0.9885

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)
=((535.92 + 828.06) / 5948.527) / ((572.828 + 839.335) / 5522.925)
=0.2292971 / 0.25569114
=0.8968

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
=(652.901 - 4.532 - 1175.469) / 5948.527
=-0.0886

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 -2.94 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 local exchange's currency.

Cerner Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.96050.9811.08740.98640.93390.83190.92710.94530.96271.2427
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 -2.75-2.80-2.43-2.88-2.62-2.85-2.73-2.80-2.74-2.31

Cerner Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.02341.0120.96271.41891.35051.3681.24270.79820.82310.832
GMI 0.96940.9871.0011.00840.99790.99780.99040.98530.99070.9862
AQI 0.92740.74310.73681.27931.26951.58861.57081.02280.93430.9072
SGI 1.13881.15791.1691.19851.23061.27631.30051.26381.19781.1288
DEPI 1.05831.03861.01211.05771.00930.95370.96010.90390.97311.0308
SGAI 1.1221.09620.94850.9620.99750.99791.06751.03420.9870.9885
LVGI 0.93810.95650.83851.48271.3611.4821.5670.93770.96040.8968
TATA -0.0698-0.077-0.0734-0.0742-0.0488-0.0542-0.0734-0.0864-0.1006-0.0886
M-score -2.70-2.80-2.75-2.29-2.19-2.07-2.31-2.83-2.96-2.94
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