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General Dynamics Corp (NYSE:GD)
Beneish M-Score
-2.38 (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.

General Dynamics Corp has a M-score of -2.38 suggests that the company is not a manipulator.

GD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.14   Max: -0.08
Current: -2.38

-3.14
-0.08

During the past 13 years, the highest Beneish M-Score of General Dynamics Corp was -0.08. The lowest was -3.14. And the median was -2.45.


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 General Dynamics 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 * 0.9552+0.528 * 0.971+0.404 * 0.9816+0.892 * 0.9659+0.115 * 1.0503
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0081+4.679 * 0.04-0.327 * 0.99
=-2.38

* 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 $3,502 Mil.
Revenue was 7731 + 7665 + 7724 + 7809 = $30,929 Mil.
Gross Profit was 1540 + 1556 + 1513 + 1542 = $6,151 Mil.
Total Current Assets was $15,297 Mil.
Total Assets was $32,668 Mil.
Property, Plant and Equipment(Net PPE) was $3,445 Mil.
Depreciation, Depletion and Amortization(DDA) was $464 Mil.
Selling, General & Admin. Expense(SGA) was $1,923 Mil.
Total Current Liabilities was $11,893 Mil.
Long-Term Debt was $3,885 Mil.
Net Income was 683 + 758 + 717 + 764 = $2,922 Mil.
Non Operating Income was 2 + 1 + 10 + 2 = $15 Mil.
Cash Flow from Operations was 499 + 434 + 439 + 229 = $1,601 Mil.
Accounts Receivable was $3,796 Mil.
Revenue was 7994 + 7882 + 7784 + 8362 = $32,022 Mil.
Gross Profit was 1510 + 1548 + 1530 + 1596 = $6,184 Mil.
Total Current Assets was $15,288 Mil.
Total Assets was $32,980 Mil.
Property, Plant and Equipment(Net PPE) was $3,370 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $1,975 Mil.
Total Current Liabilities was $13,178 Mil.
Long-Term Debt was $2,912 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)
=(3502 / 30929) / (3796 / 32022)
=0.11322707 / 0.1185435
=0.9552

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)
=(6184 / 32022) / (6151 / 30929)
=0.19311723 / 0.19887484
=0.971

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 - (15297 + 3445) / 32668) / (1 - (15288 + 3370) / 32980)
=0.42628872 / 0.43426319
=0.9816

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
=30929 / 32022
=0.9659

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))
=(480 / (480 + 3370)) / (464 / (464 + 3445))
=0.12467532 / 0.11870043
=1.0503

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)
=(1923 / 30929) / (1975 / 32022)
=0.06217466 / 0.06167635
=1.0081

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)
=((3885 + 11893) / 32668) / ((2912 + 13178) / 32980)
=0.48298029 / 0.48787144
=0.99

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
=(2922 - 15 - 1601) / 32668
=0.04

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.

General Dynamics Corp has a M-score of -2.38 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.

General Dynamics Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.97141.03061.14361.00081.04160.92910.8342
GMI 1.04170.96711.01561.11530.86770.97290.9772
AQI 1.0050.98510.98410.94980.89081.04961.0559
SGI 1.09151.01521.00650.94840.9980.99751.02
DEPI 0.83251.00651.05241.03371.09311.04241.0621
SGAI 1.04140.99011.02691.15360.91990.97550.9646
LVGI 0.91690.96031.03211.04891.00641.06510.9884
TATA -0.0143-0.0112-0.0214-0.0817-0.0215-0.03380.0143
M-score -2.47-2.50-2.45-2.91-2.64-2.71-2.52

General Dynamics Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.05020.95760.93180.84080.77170.86580.83420.99691.00290.9552
GMI 0.85490.86560.97270.96830.96740.97230.97720.98890.98630.971
AQI 0.94210.92621.04961.04991.0741.10961.05591.0351.0150.9816
SGI 0.99321.00020.99461.01591.04121.04861.021.00120.98150.9659
DEPI 1.05881.01411.04241.00061.0451.06571.06211.07871.05971.0503
SGAI 0.92610.91630.97260.96550.94610.94740.96460.95530.99361.0081
LVGI 1.06831.1371.06511.03050.98870.95280.98841.00590.9880.99
TATA -0.0304-0.086-0.0338-0.0407-0.02980.02120.01430.02390.0320.04
M-score -2.68-3.05-2.71-2.80-2.76-2.40-2.52-2.35-2.33-2.38
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