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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.
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 -2.69.
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 * 1.0162||+||0.528 * 1.046||+||0.404 * 1.1067||+||0.892 * 1.0044||+||0.115 * 0.793|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0176||+||4.679 * -0.0393||-||0.327 * 1.0186|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $8,563 Mil.|
Revenue was 8873.21937322 + 9410.17964072 + 9397.2392638 + 9171.33956386 = $36,852 Mil.
Gross Profit was 5834.75783476 + 5606.28742515 + 6016.87116564 + 6048.28660436 = $23,506 Mil.
Total Current Assets was $22,548 Mil.
Total Assets was $77,605 Mil.
Property, Plant and Equipment(Net PPE) was $14,348 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,708 Mil.
Selling, General & Admin. Expense(SGA) was $13,834 Mil.
Total Current Liabilities was $19,828 Mil.
Long-Term Debt was $22,434 Mil.
Net Income was 401.709401709 + -529.94011976 + 825.153374233 + 232.087227414 = $929 Mil.
Non Operating Income was 0 + -55.3892215569 + -6.13496932515 + -1.55763239875 = $-63 Mil.
Cash Flow from Operations was 716.524216524 + 2247.00598802 + 737.73006135 + 338.00623053 = $4,039 Mil.
|Accounts Receivable was $8,389 Mil.
Revenue was 8403.58744395 + 9680.75117371 + 9195.43973941 + 9409.47546531 = $36,689 Mil.
Gross Profit was 5260.0896861 + 6505.47730829 + 6216.61237785 + 6495.76988156 = $24,478 Mil.
Total Current Assets was $31,187 Mil.
Total Assets was $86,691 Mil.
Property, Plant and Equipment(Net PPE) was $14,413 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,076 Mil.
Selling, General & Admin. Expense(SGA) was $13,535 Mil.
Total Current Liabilities was $23,596 Mil.
Long-Term Debt was $22,752 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)|
|=||(8562.67806268 / 36851.9778416)||/||(8388.63976084 / 36689.2538224)|
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)|
|=||(5606.28742515 / 36689.2538224)||/||(5834.75783476 / 36851.9778416)|
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 - (22548.4330484 + 14347.5783476) / 77605.4131054)||/||(1 - (31186.8460389 + 14412.5560538) / 86690.5829596)|
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))|
|=||(2076.08078563 / (2076.08078563 + 14412.5560538))||/||(2708.20069009 / (2708.20069009 + 14347.5783476))|
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)|
|=||(13834.1034095 / 36851.9778416)||/||(13535.3525967 / 36689.2538224)|
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)|
|=||((22434.4729345 + 19827.6353276) / 77605.4131054)||/||((22751.8684604 + 23596.4125561) / 86690.5829596)|
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|
|=||(929.009883596 - -63.0818232808||-||4039.26649643)||/||77605.4131054|
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 -2.61 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