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Google Inc (NAS:GOOG)
Beneish M-Score
-2.76 (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.

Google Inc has a M-score of -2.76 suggests that the company is not a manipulator.

GOOG' s 10-Year Beneish M-Score Range
Min: -2.9   Max: -0.06
Current: -2.76

-2.9
-0.06

During the past 13 years, the highest Beneish M-Score of Google Inc was -0.06. The lowest was -2.90. And the median was -2.58.


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 Google Inc 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 * 0.8319+0.528 * 1.0059+0.404 * 0.8971+0.892 * 1.1676+0.115 * 1.1415
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0328+4.679 * -0.0537-0.327 * 0.9965
=-2.76

* 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 $8,421 Mil.
Revenue was 15420 + 16858 + 14893 + 14105 = $61,276 Mil.
Gross Profit was 9459 + 9420 + 8480 + 8042 = $35,401 Mil.
Total Current Assets was $75,314 Mil.
Total Assets was $116,526 Mil.
Property, Plant and Equipment(Net PPE) was $17,877 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,126 Mil.
Selling, General & Admin. Expense(SGA) was $12,556 Mil.
Total Current Liabilities was $16,270 Mil.
Long-Term Debt was $3,234 Mil.
Net Income was 3452 + 3376 + 2970 + 3228 = $13,026 Mil.
Non Operating Income was 0 + -69 + -155 + 89 = $-135 Mil.
Cash Flow from Operations was 4391 + 5238 + 5083 + 4705 = $19,417 Mil.
Accounts Receivable was $8,670 Mil.
Revenue was 12951 + 14419 + 13304 + 11807 = $52,481 Mil.
Gross Profit was 7815 + 8206 + 7349 + 7130 = $30,500 Mil.
Total Current Assets was $62,808 Mil.
Total Assets was $96,692 Mil.
Property, Plant and Equipment(Net PPE) was $12,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,350 Mil.
Selling, General & Admin. Expense(SGA) was $10,412 Mil.
Total Current Liabilities was $13,252 Mil.
Long-Term Debt was $2,989 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)
=(8421 / 61276) / (8670 / 52481)
=0.13742738 / 0.16520264
=0.8319

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)
=(9420 / 52481) / (9459 / 61276)
=0.58116271 / 0.57773027
=1.0059

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 - (75314 + 17877) / 116526) / (1 - (62808 + 12300) / 96692)
=0.20025574 / 0.22322426
=0.8971

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
=61276 / 52481
=1.1676

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))
=(3350 / (3350 + 12300)) / (4126 / (4126 + 17877))
=0.21405751 / 0.18751988
=1.1415

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)
=(12556 / 61276) / (10412 / 52481)
=0.20490894 / 0.19839561
=1.0328

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)
=((3234 + 16270) / 116526) / ((2989 + 13252) / 96692)
=0.16737895 / 0.16796633
=0.9965

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
=(13026 - -135 - 19417) / 116526
=-0.0537

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.

Google Inc has a M-score of -2.76 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.

Google Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.13610.93481.11261.11530.87171.11651.26050.95451.05080.9173
GMI 1.05550.93580.96441.00380.99150.96550.97110.98871.10751.037
AQI 0.51540.41365.46740.96171.26490.80040.92080.95441.62810.8464
SGI 2.17561.92481.72761.56471.31351.08511.23971.29281.32371.1923
DEPI 0.80371.20311.2140.99740.86770.93091.56920.94360.80831.0386
SGAI 0.75190.6681.08451.09371.04150.89771.05161.26940.96581.0118
LVGI 0.3770.70640.97321.13770.90190.9362.54730.94891.12650.8856
TATA -0.1138-0.0884-0.0299-0.0632-0.0774-0.0651-0.0418-0.0642-0.0627-0.0502
M-score -1.78-2.22-0.06-2.24-2.57-2.67-2.72-2.62-2.18-2.62

Google Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.92320.97931.02821.05081.15590.86790.90450.93320.83191.014
GMI 1.00151.02421.07141.10751.11621.10981.05471.02571.00590.9731
AQI 0.96311.70391.68261.62811.65420.85540.84750.84640.89710.9412
SGI 1.28451.28291.29581.32371.31291.28121.21641.1721.16761.1524
DEPI 0.91080.89730.87590.80830.7740.74510.87671.03861.14151.2649
SGAI 1.12071.08081.05821.03251.02771.02931.00961.0071.03281.0241
LVGI 1.06021.18941.12971.12651.0180.86560.81930.88560.99650.9767
TATA -0.0541-0.0548-0.0571-0.0627-0.0553-0.0528-0.0529-0.0503-0.0537-0.0567
M-score -2.61-2.29-2.21-2.20-2.03-2.59-2.61-2.63-2.76-2.60
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