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Google Inc (NAS:GOOG)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

GOOG' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -0.06
Current: -2.63

-2.98
-0.06

During the past 13 years, the highest Beneish M-Score of Google Inc was -0.06. The lowest was -2.98. And the median was -2.59.


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 * 0.9683+0.528 * 0.987+0.404 * 0.9412+0.892 * 1.1738+0.115 * 1.2649
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.029+4.679 * -0.0585-0.327 * 0.9767
=-2.63

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $8,321 Mil.
Revenue was 15955 + 15420 + 16858 + 14893 = $63,126 Mil.
Gross Profit was 9841 + 9459 + 9420 + 8480 = $37,200 Mil.
Total Current Assets was $77,905 Mil.
Total Assets was $121,608 Mil.
Property, Plant and Equipment(Net PPE) was $19,486 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,175 Mil.
Selling, General & Admin. Expense(SGA) was $12,969 Mil.
Total Current Liabilities was $17,097 Mil.
Long-Term Debt was $3,232 Mil.
Net Income was 3422 + 3452 + 3376 + 2970 = $13,220 Mil.
Non Operating Income was 3 + 213 + -69 + -155 = $-8 Mil.
Cash Flow from Operations was 5627 + 4391 + 5238 + 5083 = $20,339 Mil.
Accounts Receivable was $7,321 Mil.
Revenue was 13107 + 12951 + 14419 + 13304 = $53,781 Mil.
Gross Profit was 7912 + 7815 + 8206 + 7349 = $31,282 Mil.
Total Current Assets was $66,861 Mil.
Total Assets was $101,182 Mil.
Property, Plant and Equipment(Net PPE) was $12,912 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,710 Mil.
Selling, General & Admin. Expense(SGA) was $10,738 Mil.
Total Current Liabilities was $15,329 Mil.
Long-Term Debt was $1,989 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)
=(8321 / 63126) / (7321 / 53781)
=0.13181573 / 0.13612614
=0.9683

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)
=(9459 / 53781) / (9841 / 63126)
=0.58165523 / 0.5892976
=0.987

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 - (77905 + 19486) / 121608) / (1 - (66861 + 12912) / 101182)
=0.19913986 / 0.21158902
=0.9412

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
=63126 / 53781
=1.1738

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))
=(3710 / (3710 + 12912)) / (4175 / (4175 + 19486))
=0.22319817 / 0.1764507
=1.2649

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)
=(12969 / 63126) / (10738 / 53781)
=0.20544625 / 0.19966159
=1.029

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)
=((3232 + 17097) / 121608) / ((1989 + 15329) / 101182)
=0.16716828 / 0.17115693
=0.9767

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
=(13220 - -8 - 20339) / 121608
=-0.0585

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 -2.63 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 0.92661.14621.11261.04510.93021.10841.07920.98731.09760.9447
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 -1.97-2.03-0.06-2.31-2.51-2.68-2.89-2.59-2.14-2.60

Google Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.95341.19571.22231.09761.1230.84770.91320.97770.89520.9683
GMI 1.00151.02421.07141.10751.11621.09411.04011.01220.99320.987
AQI 0.96311.70391.68261.62811.65420.85540.84750.84640.89710.9412
SGI 1.28451.28291.29581.32371.31291.25791.19491.15211.14861.1738
DEPI 0.91080.89730.87590.80830.7740.74510.87671.03861.14151.2649
SGAI 1.12071.08081.05821.03251.02771.02441.0051.00261.02891.029
LVGI 1.06021.18941.12971.12651.0180.86560.81930.88560.99650.9767
TATA -0.0541-0.0548-0.0571-0.0627-0.0553-0.0527-0.0528-0.0502-0.0554-0.0585
M-score -2.59-2.09-2.03-2.15-2.06-2.63-2.63-2.61-2.74-2.63
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