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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-1.77 (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 -1.84 signals that the company is a manipulator.

GSK' s Beneish M-Score Range Over the Past 10 Years
Min: -4.15   Max: 1.07
Current: -1.77

-4.15
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.15. And the median was -2.79.


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 * 1.1269+0.528 * 1.067+0.404 * 1.2122+0.892 * 0.9657+0.115 * 0.7033
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0636+4.679 * 0.0831-0.327 * 0.7316
=-1.84

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $9,190 Mil.
Revenue was 9397.2392638 + 9171.33956386 + 8403.58744395 + 0 = $26,972 Mil.
Gross Profit was 6016.87116564 + 6048.28660436 + 5260.0896861 + 0 = $17,325 Mil.
Total Current Assets was $26,044 Mil.
Total Assets was $81,472 Mil.
Property, Plant and Equipment(Net PPE) was $14,716 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,309 Mil.
Selling, General & Admin. Expense(SGA) was $10,302 Mil.
Total Current Liabilities was $19,555 Mil.
Long-Term Debt was $23,172 Mil.
Net Income was 825.153374233 + 232.087227414 + 12091.180867 + 0 = $13,148 Mil.
Non Operating Income was -6.13496932515 + -1.55763239875 + 1294.46935725 + 0 = $1,287 Mil.
Cash Flow from Operations was 737.73006135 + 338.00623053 + 553.064275037 + 3458.52895149 = $5,087 Mil.
Accounts Receivable was $8,445 Mil.
Revenue was 9195.43973941 + 9409.47546531 + 9323.92026578 + 0 = $27,929 Mil.
Gross Profit was 6216.61237785 + 6495.76988156 + 6428.57142857 + 0 = $19,141 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 $10,030 Mil.
Total Current Liabilities was $24,870 Mil.
Long-Term Debt was $22,181 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)
=(9190.18404908 / 26972.1662716) / (8444.62540717 / 27928.8354705)
=0.34072844 / 0.30236225
=1.1269

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)
=(6048.28660436 / 27928.8354705) / (6016.87116564 / 26972.1662716)
=0.68534736 / 0.642338
=1.067

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 - (26044.4785276 + 14716.2576687) / 81472.392638) / (1 - (24203.5830619 + 14377.8501629) / 65640.0651466)
=0.4996988 / 0.41222738
=1.2122

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
=26972.1662716 / 27928.8354705
=0.9657

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))
=(1516.19515056 / (1516.19515056 + 14377.8501629)) / (2309.22104111 / (2309.22104111 + 14716.2576687))
=0.09539391 / 0.13563325
=0.7033

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)
=(10302.208325 / 26972.1662716) / (10029.7453678 / 27928.8354705)
=0.38195702 / 0.35911792
=1.0636

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)
=((23171.7791411 + 19555.2147239) / 81472.392638) / ((22180.781759 + 24869.7068404) / 65640.0651466)
=0.52443524 / 0.71679528
=0.7316

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
=(13148.4214686 - 1286.77675553 - 5087.3295184) / 81472.392638
=0.0831

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 -1.84 signals that the company is likely to 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 0.92111.28971.06360.88950.89160.99790.76470.96111.0331.5672
GMI 0.99461.01751.04650.99561.00991.01771.02811.03560.99181.0822
AQI 1.10211.03211.0251.17551.09350.9691.16480.93240.97391.2222
SGI 1.2071.0050.78931.27270.96180.96460.99941.01590.830.9947
DEPI 0.98471.05111.02430.790.91231.11910.98961.02840.9760.8722
SGAI 0.93360.96031.04771.07551.35970.67881.06550.96211.12031.0767
LVGI 0.86671.19231.14120.97931.04131.01351.03671.0081.03540.7503
TATA 0.0262-0.0475-0.0673-0.0581-0.1244-0.03880.0037-0.0492-0.05940.0935
M-score -2.15-2.46-2.94-2.57-3.24-2.63-2.62-2.73-2.93-1.34

GlaxoSmithKline PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.93830.99991.04841.03571.08990.93181.03081.05671.12691.1967
GMI 1.0121.0120.99881.01051.00781.00781.03541.04621.0671.0873
AQI 1.01060.93240.97190.91620.8980.97391.06581.15181.21221.2222
SGI 0.97650.97650.98620.95250.92010.92010.90270.92050.96571.3027
DEPI 0.46441.08241.24661.53522.32190.87831.06660.81790.70330.8989
SGAI 0.95570.95570.98341.02211.12131.12131.13281.15841.06361.0747
LVGI 1.0271.0080.9971.00671.03441.03540.78480.76440.73160.7503
TATA -0.0981-0.1001-0.1043-0.0912-0.0861-0.08690.05940.06220.08310.0933
M-score -3.07-2.98-2.92-2.89-2.79-3.07-2.16-2.09-1.84-1.40
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