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Danaher Corporation (NYSE:DHR)
Beneish M-Score
-2.50 (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.

Danaher Corporation has a M-score of -2.50 suggests that the company is not a manipulator.

DHR' s 10-Year Beneish M-Score Range
Min: -2.87   Max: -2.2
Current: -2.5

-2.87
-2.2

During the past 13 years, the highest Beneish M-Score of Danaher Corporation was -2.20. The lowest was -2.87. And the median was -2.50.


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 Danaher Corporation 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 * 1.0575+0.528 * 0.991+0.404 * 0.9681+0.892 * 1.0515+0.115 * 0.9849
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9965+4.679 * -0.0308-0.327 * 0.8594
=-2.50

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $3,468 Mil.
Revenue was 4662.7 + 5266.7 + 4669.1 + 4737.5 = $19,336 Mil.
Gross Profit was 2452.9 + 2711.7 + 2424.7 + 2495.5 = $10,085 Mil.
Total Current Assets was $9,404 Mil.
Total Assets was $35,043 Mil.
Property, Plant and Equipment(Net PPE) was $2,183 Mil.
Depreciation, Depletion and Amortization(DDA) was $903 Mil.
Selling, General & Admin. Expense(SGA) was $5,485 Mil.
Total Current Liabilities was $4,304 Mil.
Long-Term Debt was $3,423 Mil.
Net Income was 579.7 + 789.3 + 597 + 616.8 = $2,583 Mil.
Non Operating Income was 0 + 201.5 + 0 + 0 = $202 Mil.
Cash Flow from Operations was 511.2 + 1078.2 + 971.4 + 899.2 = $3,460 Mil.
Accounts Receivable was $3,118 Mil.
Revenue was 4444.7 + 4975.2 + 4415.5 + 4553.5 = $18,389 Mil.
Gross Profit was 2325.7 + 2545.3 + 2278 + 2355.5 = $9,505 Mil.
Total Current Assets was $7,910 Mil.
Total Assets was $32,469 Mil.
Property, Plant and Equipment(Net PPE) was $2,110 Mil.
Depreciation, Depletion and Amortization(DDA) was $854 Mil.
Selling, General & Admin. Expense(SGA) was $5,235 Mil.
Total Current Liabilities was $3,927 Mil.
Long-Term Debt was $4,404 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)
=(3467.6 / 19336) / (3118.3 / 18388.9)
=0.17933388 / 0.16957512
=1.0575

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)
=(2711.7 / 18388.9) / (2452.9 / 19336)
=0.51686071 / 0.52155565
=0.991

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 - (9404.3 + 2182.6) / 35042.6) / (1 - (7910 + 2109.9) / 32469.3)
=0.66934816 / 0.69140388
=0.9681

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
=19336 / 18388.9
=1.0515

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))
=(854.3 / (854.3 + 2109.9)) / (902.9 / (902.9 + 2182.6))
=0.28820592 / 0.2926268
=0.9849

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)
=(5485 / 19336) / (5234.7 / 18388.9)
=0.28366777 / 0.28466629
=0.9965

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)
=((3422.9 + 4304.4) / 35042.6) / ((4404.3 + 3926.5) / 32469.3)
=0.22051161 / 0.25657467
=0.8594

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
=(2582.8 - 201.5 - 3460) / 35042.6
=-0.0308

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.

Danaher Corporation has a M-score of -2.50 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.

Danaher Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.08971.00090.97741.02960.82911.14861.0720.9441.009
GMI 0.96230.97090.97540.96980.97730.9911.00420.98570.9898
AQI 1.15921.05151.11451.05930.98930.96851.04640.97810.9556
SGI 1.30141.14261.20261.16481.15160.88091.28211.13491.047
DEPI 1.09930.9050.9541.02030.8321.018600.82380.9779
SGAI 1.04880.86651.06331.02471.07071.08260.99730.99081.0015
LVGI 0.95220.92651.11240.94940.84070.95181.14270.92030.797
TATA -0.0348-0.0329-0.0343-0.0158-0.031-0.0331-0.0141-0.031-0.0381
M-score -2.23-2.46-2.50-2.36-2.64-2.62-2.37-2.57-2.57

Danaher Corporation Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.0721.01670.73370.80530.9440.96851.02961.08051.0091.0575
GMI 1.00421.02891.0461.01430.98570.97940.9720.98220.98980.991
AQI 1.04641.04841.00040.98960.97810.9660.95130.97410.95560.9681
SGI 1.28211.33351.36061.23251.13491.07451.031.04581.0471.0515
DEPI 1.42281.30490.76640.88990.82380.89640.99010.99140.97790.9849
SGAI 0.99730.99080.95910.95790.99080.99641.01221.01011.00150.9965
LVGI 1.14271.10890.83050.83830.92030.88950.87320.8420.7970.8594
TATA -0.0141-0.0147-0.027-0.0351-0.031-0.0359-0.0314-0.0297-0.0381-0.0308
M-score -2.20-2.20-2.47-2.57-2.57-2.61-2.57-2.47-2.57-2.50
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