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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-2.90 (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 -2.96 suggests that the company is not a manipulator.

GSK' s 10-Year Beneish M-Score Range
Min: -4.21   Max: -0.74
Current: -2.9

-4.21
-0.74

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was -0.74. The lowest was -4.21. And the median was -2.66.


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 * 0.9496+0.528 * 0.9904+0.404 * 0.9739+0.892 * 0.9028+0.115 * 0.8783
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.121+4.679 * -0.0609-0.327 * 1.0354
=-2.96

* 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 $5,565 Mil.
Revenue was 9680.75117371 + 9195.43973941 + 9409.47546531 + 9323.92026578 = $37,610 Mil.
Gross Profit was 6505.47730829 + 6216.61237785 + 6495.76988156 + 6428.57142857 = $25,646 Mil.
Total Current Assets was $22,970 Mil.
Total Assets was $63,617 Mil.
Property, Plant and Equipment(Net PPE) was $14,166 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,449 Mil.
Selling, General & Admin. Expense(SGA) was $13,484 Mil.
Total Current Liabilities was $20,806 Mil.
Long-Term Debt was $24,790 Mil.
Net Income was 1616.58841941 + 653.094462541 + 1106.59898477 + 1109.6345515 = $4,486 Mil.
Non Operating Income was -40.6885758998 + 16.2866449511 + 13.5363790186 + 1.66112956811 = $-9 Mil.
Cash Flow from Operations was 3458.52895149 + 2073.28990228 + 1296.10829103 + 1539.86710963 = $8,368 Mil.
Accounts Receivable was $6,491 Mil.
Revenue was 11302.7823241 + 10349.7615262 + 10244.5820433 + 9760.18099548 = $41,657 Mil.
Gross Profit was 7168.57610475 + 6993.64069952 + 7191.9504644 + 6779.78883861 = $28,134 Mil.
Total Current Assets was $24,921 Mil.
Total Assets was $68,881 Mil.
Property, Plant and Equipment(Net PPE) was $14,520 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,160 Mil.
Selling, General & Admin. Expense(SGA) was $13,322 Mil.
Total Current Liabilities was $22,385 Mil.
Long-Term Debt was $25,296 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)
=(5564.94522692 / 37609.5866442) / (6490.99836334 / 41657.3068891)
=0.14796614 / 0.15581896
=0.9496

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)
=(6216.61237785 / 41657.3068891) / (6505.47730829 / 37609.5866442)
=0.67536666 / 0.68191207
=0.9904

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 - (22970.2660407 + 14165.8841941) / 63616.5884194) / (1 - (24921.4402619 + 14520.4582651) / 68880.5237316)
=0.41625052 / 0.42738678
=0.9739

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
=37609.5866442 / 41657.3068891
=0.9028

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))
=(2159.82962436 / (2159.82962436 + 14520.4582651)) / (2449.43269183 / (2449.43269183 + 14165.8841941))
=0.12948395 / 0.14742016
=0.8783

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)
=(13483.5794836 / 37609.5866442) / (13322.4631603 / 41657.3068891)
=0.35851443 / 0.31981096
=1.121

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)
=((24790.2973396 + 20805.9467919) / 63616.5884194) / ((25296.2356792 + 22384.6153846) / 68880.5237316)
=0.71673514 / 0.69222544
=1.0354

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
=(4485.91641821 - -9.20442236198 - 8367.79425443) / 63616.5884194
=-0.0609

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 -2.96 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.91440.92111.28971.06360.88950.89160.99790.97410.75451.033
GMI 1.00230.99461.01751.04650.99561.00991.00041.04411.03730.9918
AQI 1.05311.10211.03211.0251.17551.09350.9691.16460.93260.9739
SGI 0.981.2071.0050.78931.27270.96180.96460.99941.01590.83
DEPI 1.01770.98471.05111.02430.790.91231.11910.98961.02840.976
SGAI 0.9290.93360.96031.04771.07551.35970.7011.0260.96771.1203
LVGI 0.96250.86671.19231.14120.97931.04131.01351.03681.00791.0354
TATA -0.0620.0262-0.0475-0.0673-0.0581-0.1244-0.03870.0039-0.0492-0.0594
M-score -2.82-2.15-2.46-2.94-2.57-3.24-2.65-2.41-2.92-2.93

GlaxoSmithKline PLC Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.02341.00930.9931.03610.93020.77411.03651.01421.05670.9496
GMI 1.0291.04441.05681.03071.0191.03841.02831.03721.03530.9904
AQI 1.15611.16461.17371.21.01060.93260.97190.91620.8980.9739
SGI 0.95470.96450.95030.97360.98510.99010.99750.97270.94890.9028
DEPI 1.31721.01580.90520.70370.46441.08241.24661.53522.32190.8783
SGAI 0.82531.02521.03151.03870.97420.96730.98661.01311.08221.121
LVGI 1.02291.03681.0511.00251.0271.00790.9971.00671.03441.0354
TATA 0.00920.0041-0.0101-0.0152-0.077-0.047-0.0489-0.0356-0.0303-0.0609
M-score -2.32-2.41-2.51-2.49-2.97-2.91-2.64-2.61-2.51-2.96
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