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GlaxoSmithKline PLC (NYSE:GSK)
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.

GlaxoSmithKline PLC has a M-score of -2.73 suggests that the company is not a manipulator.

GSK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.78   Max: 1.07
Current: -2.63

-3.78
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -3.78. And the median was -2.67.


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 GlaxoSmithKline PLC 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 * 0.9973+0.528 * 1.0272+0.404 * 1.0632+0.892 * 1.0139+0.115 * 1.1988
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9122+4.679 * -0.0649-0.327 * 1.0945
=-2.73

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $8,521 Mil.
Revenue was 9278.40909091 + 8873.21937322 + 9410.17964072 + 9397.2392638 = $36,959 Mil.
Gross Profit was 6261.36363636 + 5834.75783476 + 5606.28742515 + 6016.87116564 = $23,719 Mil.
Total Current Assets was $23,977 Mil.
Total Assets was $81,857 Mil.
Property, Plant and Equipment(Net PPE) was $14,970 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,149 Mil.
Selling, General & Admin. Expense(SGA) was $12,964 Mil.
Total Current Liabilities was $25,720 Mil.
Long-Term Debt was $21,446 Mil.
Net Income was -617.897727273 + 401.709401709 + -529.94011976 + 825.153374233 = $79 Mil.
Non Operating Income was -2.84090909091 + 0 + -55.3892215569 + -6.13496932515 = $-64 Mil.
Cash Flow from Operations was 1755.68181818 + 716.524216524 + 2247.00598802 + 737.73006135 = $5,457 Mil.
Accounts Receivable was $8,427 Mil.
Revenue was 9171.33956386 + 8403.58744395 + 9680.75117371 + 9195.43973941 = $36,451 Mil.
Gross Profit was 6048.28660436 + 5260.0896861 + 6505.47730829 + 6216.61237785 = $24,030 Mil.
Total Current Assets was $28,218 Mil.
Total Assets was $84,296 Mil.
Property, Plant and Equipment(Net PPE) was $14,516 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,571 Mil.
Selling, General & Admin. Expense(SGA) was $14,016 Mil.
Total Current Liabilities was $21,489 Mil.
Long-Term Debt was $22,891 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)
=(8521.30681818 / 36959.0473687) / (8426.79127726 / 36451.1179209)
=0.23056078 / 0.2311806
=0.9973

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)
=(24030.4659766 / 36451.1179209) / (23719.2800619 / 36959.0473687)
=0.65925182 / 0.64177195
=1.0272

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 - (23977.2727273 + 14970.1704545) / 81856.5340909) / (1 - (28218.0685358 + 14515.576324) / 84295.9501558)
=0.52419873 / 0.49305222
=1.0632

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
=36959.0473687 / 36451.1179209
=1.0139

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))
=(2570.84650823 / (2570.84650823 + 14515.576324)) / (2148.51947372 / (2148.51947372 + 14970.1704545))
=0.15046137 / 0.12550724
=1.1988

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)
=(12964.2276661 / 36959.0473687) / (14016.1391615 / 36451.1179209)
=0.35077278 / 0.38451877
=0.9122

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)
=((21446.0227273 + 25720.1704545) / 81856.5340909) / ((22890.9657321 + 21489.0965732) / 84295.9501558)
=0.5762056 / 0.52647918
=1.0945

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
=(79.0249289093 - -64.3650999729 - 5456.94208408) / 81856.5340909
=-0.0649

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.

GlaxoSmithKline PLC has a M-score of -2.73 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.

GlaxoSmithKline PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92111.28971.06360.88950.89160.99790.97410.75451.0331.0341
GMI 0.99461.01751.04650.99561.00991.00041.04411.03730.99181.0822
AQI 1.10211.03211.0251.17551.09350.9691.16460.93260.97391.2222
SGI 1.2071.0050.78931.27270.96180.96460.99941.01590.830.9947
DEPI 0.98471.05111.02430.790.91231.11910.98961.02840.9760.9763
SGAI 0.93360.96031.04771.07551.35970.7011.0260.96771.12031.0767
LVGI 0.86671.19231.14120.97931.04131.01351.03681.00791.03540.7503
TATA 0.0382-0.0237-0.0673-0.0581-0.1244-0.03870.0039-0.0492-0.05940.0941
M-score -2.10-2.35-2.94-2.57-3.24-2.65-2.41-2.92-2.93-1.81

GlaxoSmithKline PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.03651.01421.05670.94961.04551.07771.16491.06341.01620.9973
GMI 1.02831.03721.03530.99041.01021.01741.03141.08191.0461.0272
AQI 0.97190.91620.8980.97391.06581.15181.21221.22221.10671.0632
SGI 0.99750.97270.94890.90280.89010.90260.93430.96741.00441.0139
DEPI 1.24661.53522.32190.87831.06660.81790.70331.00370.7931.1988
SGAI 0.98661.01311.08221.1211.12991.14981.08021.07651.01760.9122
LVGI 0.9971.00671.03441.03540.78480.76440.73160.75031.01861.0945
TATA -0.0489-0.0356-0.0303-0.06090.07850.08190.10350.0939-0.0393-0.0649
M-score -2.64-2.61-2.51-2.96-2.08-2.01-1.76-1.81-2.61-2.73
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