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Google Inc (NAS:GOOG)
Beneish M-Score
-2.67 (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 -2.67 suggests that the company is not a manipulator.

GOOG' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -0.06
Current: -2.67

-2.89
-0.06

During the past 13 years, the highest Beneish M-Score of Google Inc was -0.06. The lowest was -2.89. 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 * 0.8886+0.528 * 0.9887+0.404 * 1.0446+0.892 * 1.1888+0.115 * 1.1158
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0706+4.679 * -0.0614-0.327 * 0.9339
=-2.67

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $9,383 Mil.
Revenue was 18103 + 16523 + 15955 + 15420 = $66,001 Mil.
Gross Profit was 11182 + 9828 + 9841 + 9459 = $40,310 Mil.
Total Current Assets was $80,685 Mil.
Total Assets was $131,133 Mil.
Property, Plant and Equipment(Net PPE) was $23,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,979 Mil.
Selling, General & Admin. Expense(SGA) was $13,982 Mil.
Total Current Liabilities was $16,805 Mil.
Long-Term Debt was $3,228 Mil.
Net Income was 4757 + 2813 + 3422 + 3452 = $14,444 Mil.
Non Operating Income was -69 + -29 + 3 + 213 = $118 Mil.
Cash Flow from Operations was 6364 + 5994 + 5627 + 4391 = $22,376 Mil.
Accounts Receivable was $8,882 Mil.
Revenue was 15707 + 13754 + 13107 + 12951 = $55,519 Mil.
Gross Profit was 9454 + 8345 + 7912 + 7815 = $33,526 Mil.
Total Current Assets was $72,886 Mil.
Total Assets was $110,920 Mil.
Property, Plant and Equipment(Net PPE) was $16,524 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,939 Mil.
Selling, General & Admin. Expense(SGA) was $10,986 Mil.
Total Current Liabilities was $15,908 Mil.
Long-Term Debt was $2,236 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)
=(9383 / 66001) / (8882 / 55519)
=0.14216451 / 0.15998127
=0.8886

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)
=(9828 / 55519) / (11182 / 66001)
=0.60386534 / 0.61074832
=0.9887

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 - (80685 + 23883) / 131133) / (1 - (72886 + 16524) / 110920)
=0.20258059 / 0.19392355
=1.0446

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
=66001 / 55519
=1.1888

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))
=(3939 / (3939 + 16524)) / (4979 / (4979 + 23883))
=0.19249377 / 0.17251057
=1.1158

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)
=(13982 / 66001) / (10986 / 55519)
=0.21184528 / 0.1978782
=1.0706

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)
=((3228 + 16805) / 131133) / ((2236 + 15908) / 110920)
=0.15276856 / 0.16357735
=0.9339

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
=(14444 - 118 - 22376) / 131133
=-0.0614

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 -2.67 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.14621.11261.04510.93021.10841.07920.98731.09761.0180.8886
GMI 0.93580.96441.00380.99150.96550.97110.98871.10750.9750.9887
AQI 0.41365.46740.96171.26490.80040.92080.95441.62810.84641.0446
SGI 1.92481.72761.56471.31351.08511.23971.29281.32371.10651.1888
DEPI 1.20311.2140.99740.86770.93091.56920.94360.80831.03861.1158
SGAI 0.6681.08451.09371.04150.89771.05161.26940.96580.9941.0706
LVGI 0.70640.97321.13770.90190.9362.54730.94891.12650.88560.9339
TATA -0.0884-0.0299-0.0632-0.0774-0.0651-0.0418-0.0642-0.0627-0.05-0.0614
M-score -2.03-0.06-2.31-2.51-2.68-2.89-2.59-2.14-2.63-2.67

Google Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.22231.09761.1230.84770.93241.0180.93061.00480.88660.8886
GMI 1.07141.10751.11621.09411.0230.9750.95820.95380.98120.9887
AQI 1.68261.62811.65420.85540.84750.84640.89710.94120.96611.0446
SGI 1.29581.32371.31291.25791.17031.10651.10491.13121.17291.1888
DEPI 0.87590.80830.7740.74510.87671.03861.14151.26491.1161.1158
SGAI 1.05821.03251.02771.02441.00220.9941.02171.02231.03731.0706
LVGI 1.12971.12651.0180.86560.81930.88560.99650.97671.05710.9339
TATA -0.0571-0.0627-0.0553-0.0527-0.0527-0.05-0.0553-0.0584-0.066-0.0614
M-score -2.03-2.15-2.06-2.63-2.64-2.63-2.76-2.65-2.77-2.67
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