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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 -2.59 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.26. And the median was -2.68.
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 * 1.0289||+||0.528 * 1.0362||+||0.404 * 0.9162||+||0.892 * 0.9865||+||0.115 * 1.5492|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0102||+||4.679 * -0.0357||-||0.327 * 1.0067|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $8,737 Mil.|
Revenue was 9489.76109215 + 9402.01005025 + 11377.2652389 + 10483.0917874 = $40,752 Mil.
Gross Profit was 6551.19453925 + 6482.4120603 + 7215.815486 + 7083.73590982 = $27,333 Mil.
Total Current Assets was $23,128 Mil.
Total Assets was $66,297 Mil.
Property, Plant and Equipment(Net PPE) was $14,790 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,082 Mil.
Selling, General & Admin. Expense(SGA) was $13,628 Mil.
Total Current Liabilities was $20,908 Mil.
Long-Term Debt was $24,756 Mil.
Net Income was 1116.04095563 + 1118.9279732 + 4054.36573311 + 1560.38647343 = $7,850 Mil.
Non Operating Income was 13.6518771331 + 1.67504187605 + 370.675453048 + 22.5442834138 = $409 Mil.
Cash Flow from Operations was 1307.16723549 + 1552.7638191 + 3602.96540362 + 3344.60547504 = $9,808 Mil.
|Accounts Receivable was $8,608 Mil.
Revenue was 10042.4886191 + 9909.64777948 + 10865.8146965 + 10493.5691318 = $41,312 Mil.
Gross Profit was 7050.07587253 + 6883.61408882 + 7642.17252396 + 7135.04823151 = $28,711 Mil.
Total Current Assets was $20,388 Mil.
Total Assets was $63,822 Mil.
Property, Plant and Equipment(Net PPE) was $13,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,218 Mil.
Selling, General & Admin. Expense(SGA) was $13,675 Mil.
Total Current Liabilities was $18,933 Mil.
Long-Term Debt was $24,733 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(8737.20136519 / 40752.1281687)||/||(8608.49772382 / 41311.5202269)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(6482.4120603 / 41311.5202269)||/||(6551.19453925 / 40752.1281687)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (23127.9863481 + 14790.1023891) / 66296.9283276)||/||(1 - (20388.4673748 + 13616.0849772) / 63822.4582701)|
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.
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))|
|=||(3217.68166636 / (3217.68166636 + 13616.0849772))||/||(2081.64198571 / (2081.64198571 + 14790.1023891))|
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)|
|=||(13627.5627048 / 40752.1281687)||/||(13674.7735222 / 41311.5202269)|
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)|
|=||((24755.9726962 + 20907.8498294) / 66296.9283276)||/||((24732.9286798 + 18933.23217) / 63822.4582701)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(7849.72113537 - 408.546655471||-||9807.50193325)||/||66296.9283276|
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 -2.59 suggests that the company will not be a manipulator.
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
GlaxoSmithKline PLC Annual Data
GlaxoSmithKline PLC Quarterly Data