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GuruFocus has detected 5 Warning Signs with Danaher Corp $DHR.
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Danaher Corp (NYSE:DHR)
Beneish M-Score
-2.54 (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 Corp has a M-score of -2.54 suggests that the company is not a manipulator.

DHR' s Beneish M-Score Range Over the Past 10 Years
Min: -2.89   Max: -2.22
Current: -2.54

-2.89
-2.22

During the past 13 years, the highest Beneish M-Score of Danaher Corp was -2.22. The lowest was -2.89. And the median was -2.55.


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 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 * 0.9386+0.528 * 0.9755+0.404 * 1.0141+0.892 * 1.1371+0.115 * 0.854
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0261+4.679 * -0.0224-0.327 * 0.9682
=-2.54

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $3,186 Mil.
Revenue was 4584.3 + 4132.1 + 5785 + 5387.2 = $19,889 Mil.
Gross Profit was 2500 + 2286 + 3149.4 + 2862.6 = $10,798 Mil.
Total Current Assets was $6,665 Mil.
Total Assets was $45,295 Mil.
Property, Plant and Equipment(Net PPE) was $2,354 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,128 Mil.
Selling, General & Admin. Expense(SGA) was $6,288 Mil.
Total Current Liabilities was $6,874 Mil.
Long-Term Debt was $9,674 Mil.
Net Income was 747 + 391.6 + 656.7 + 758.4 = $2,554 Mil.
Non Operating Income was 0 + -178.8 + 0 + 223.4 = $45 Mil.
Cash Flow from Operations was 649 + 818.2 + 1281.8 + 772.8 = $3,522 Mil.
Accounts Receivable was $2,985 Mil.
Revenue was 4323 + 3512.2 + 4960.2 + 4694.7 = $17,490 Mil.
Gross Profit was 2257.2 + 1893.4 + 2644 + 2468.2 = $9,263 Mil.
Total Current Assets was $7,837 Mil.
Total Assets was $48,222 Mil.
Property, Plant and Equipment(Net PPE) was $2,303 Mil.
Depreciation, Depletion and Amortization(DDA) was $881 Mil.
Selling, General & Admin. Expense(SGA) was $5,389 Mil.
Total Current Liabilities was $6,170 Mil.
Long-Term Debt was $12,025 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)
=(3186.1 / 19888.6) / (2985.1 / 17490.1)
=0.1601973 / 0.1706737
=0.9386

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)
=(9262.8 / 17490.1) / (10798 / 19888.6)
=0.52960246 / 0.54292409
=0.9755

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 - (6665.1 + 2354) / 45295.3) / (1 - (7836.7 + 2302.7) / 48222.2)
=0.80088221 / 0.78973585
=1.0141

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
=19888.6 / 17490.1
=1.1371

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))
=(880.8 / (880.8 + 2302.7)) / (1128.1 / (1128.1 + 2354))
=0.27667661 / 0.32397117
=0.854

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)
=(6288.2 / 19888.6) / (5389.4 / 17490.1)
=0.31617107 / 0.30814003
=1.0261

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)
=((9674.2 + 6874) / 45295.3) / ((12025.2 + 6170.4) / 48222.2)
=0.36534033 / 0.37732828
=0.9682

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
=(2553.7 - 44.6 - 3521.8) / 45295.3
=-0.0224

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 Corp has a M-score of -2.54 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.

Danaher Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.02960.82911.14861.03171.0720.9441.05511.41860.77230.9125
GMI 0.96980.97730.9910.92511.00420.98571.0090.95990.98870.9737
AQI 1.05930.98930.96851.01961.04640.97810.95561.01921.15071.0141
SGI 1.16481.15160.88091.1221.28211.13491.00120.70381.12181.1697
DEPI 1.02030.8321.01860.92081.07640.82381.01421.1180.89810.854
SGAI 1.02471.07071.08261.00670.99730.99080.98641.12051.04881.01
LVGI 0.94940.84070.95180.95051.14270.92030.7971.03541.58650.9682
TATA -0.0158-0.031-0.0331-0.0262-0.0141-0.031-0.0381-0.0347-0.0095-0.0224
M-score -2.36-2.64-2.62-2.49-2.24-2.57-2.55-2.55-2.78-2.53

Danaher Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04061.37541.38251.38231.73110.65730.82170.7840.48660.9386
GMI 1.01430.94910.95090.94840.93681.01661.01341.01031.01770.9755
AQI 0.94351.01921.04211.01461.16121.15071.1191.06951.03141.0141
SGI 0.99670.72580.7190.71010.6451.3181.36691.42921.62151.1371
DEPI 1.01721.1181.10951.11421.47590.89811.01940.92950.58690.854
SGAI 0.97911.12651.14271.14771.2360.97730.97090.98760.91221.0261
LVGI 0.91341.03541.00661.05241.93711.58651.6311.77430.73280.9682
TATA -0.0318-0.0347-0.0362-0.037-0.0112-0.0095-0.0153-0.0188-0.04-0.0224
M-score -2.58-2.58-2.57-2.61-2.44-2.69-2.53-2.61-2.51-2.54
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