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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-2.52 (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 -2.51 suggests that the company is not a manipulator.

GSK' s 10-Year Beneish M-Score Range
Min: -4.21   Max: 1.07
Current: -2.52

-4.21
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.21. 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 * 1.0567+0.528 * 1.0349+0.404 * 0.898+0.892 * 0.9489+0.115 * 2.3219
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0805+4.679 * -0.0303-0.327 * 1.0344
=-2.51

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $8,445 Mil.
Revenue was 9195.43973941 + 9409.47546531 + 9323.92026578 + 11302.7823241 = $39,232 Mil.
Gross Profit was 6216.61237785 + 6495.76988156 + 6428.57142857 + 7168.57610475 = $26,310 Mil.
Total Current Assets was $24,204 Mil.
Total Assets was $65,640 Mil.
Property, Plant and Equipment(Net PPE) was $14,378 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,516 Mil.
Selling, General & Admin. Expense(SGA) was $13,630 Mil.
Total Current Liabilities was $24,870 Mil.
Long-Term Debt was $22,181 Mil.
Net Income was 653.094462541 + 1106.59898477 + 1109.6345515 + 4027.82324059 = $6,897 Mil.
Non Operating Income was 16.2866449511 + 13.5363790186 + 1.66112956811 + 368.248772504 = $400 Mil.
Cash Flow from Operations was 2073.28990228 + 1296.10829103 + 1539.86710963 + 3579.37806874 = $8,489 Mil.
Accounts Receivable was $8,421 Mil.
Revenue was 10349.7615262 + 10244.5820433 + 9760.18099548 + 10988.6914378 = $41,343 Mil.
Gross Profit was 6993.64069952 + 7191.9504644 + 6779.78883861 + 7728.59450727 = $28,694 Mil.
Total Current Assets was $21,418 Mil.
Total Assets was $65,358 Mil.
Property, Plant and Equipment(Net PPE) was $13,936 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,965 Mil.
Selling, General & Admin. Expense(SGA) was $13,294 Mil.
Total Current Liabilities was $20,401 Mil.
Long-Term Debt was $24,889 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)
=(8444.62540717 / 39231.6177946) / (8421.3036566 / 41343.2160029)
=0.2152505 / 0.20369252
=1.0567

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)
=(6495.76988156 / 41343.2160029) / (6216.61237785 / 39231.6177946)
=0.69404312 / 0.67062057
=1.0349

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 - (24203.5830619 + 14377.8501629) / 65640.0651466) / (1 - (21418.1240064 + 13936.4069952) / 65357.7106518)
=0.41222738 / 0.45906106
=0.898

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
=39231.6177946 / 41343.2160029
=0.9489

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))
=(3965.20178631 / (3965.20178631 + 13936.4069952)) / (1516.19515056 / (1516.19515056 + 14377.8501629))
=0.22149975 / 0.09539391
=2.3219

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)
=(13630.4000323 / 39231.6177946) / (13293.6986412 / 41343.2160029)
=0.34743405 / 0.32154486
=1.0805

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)
=((22180.781759 + 24869.7068404) / 65640.0651466) / ((24888.7122417 + 20400.63593) / 65357.7106518)
=0.71679528 / 0.69294576
=1.0344

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
=(6897.1512394 - 399.732926042 - 8488.64337169) / 65640.0651466
=-0.0303

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 -2.51 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.28530.91440.92111.28971.06360.88950.89160.99790.76470.9611
GMI 1.0081.00230.99461.01751.04650.99561.0251.00151.02941.0356
AQI 1.25671.05311.10211.03211.0251.17551.09350.9691.16480.9324
SGI 1.02840.981.2071.0050.78931.27270.96180.96460.99941.0159
DEPI 0.96761.01770.98471.05111.02430.790.91231.11910.98961.0284
SGAI 1.0190.9290.93360.96031.04771.07551.32780.69211.07010.9621
LVGI 1.10540.96250.86671.19231.14120.97931.04131.01351.03671.008
TATA -0.0654-0.0620.0262-0.0475-0.0673-0.0581-0.1244-0.03870.0037-0.0492
M-score -2.43-2.82-2.15-2.46-2.94-2.57-3.22-2.64-2.62-2.73

GlaxoSmithKline PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.92361.02040.79230.98941.05090.94430.98611.03541.01421.0567
GMI 0.99951.00421.02961.04511.02341.01521.03671.0271.03631.0349
AQI 0.97811.15611.16481.17371.21.01060.93240.97190.91620.898
SGI 0.9830.95470.96450.95030.97360.98510.99010.99750.97270.9489
DEPI 0.95881.31721.01580.90520.70370.46441.08241.24661.53522.3219
SGAI 0.81650.86821.06941.06361.05570.97750.96180.98231.01021.0805
LVGI 1.03111.02291.03671.0511.00251.0271.0080.9971.00671.0344
TATA -0.03670.0080.0039-0.0099-0.0146-0.076-0.047-0.0489-0.0356-0.0303
M-score -2.73-2.35-2.62-2.52-2.48-2.95-2.72-2.64-2.61-2.51
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