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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-1.91 (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 -2.01 signals that the company is a manipulator.

GSK' s 10-Year Beneish M-Score Range
Min: -4.32   Max: 1.07
Current: -1.91

-4.32
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.32. 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 * 1.0777+0.528 * 1.0174+0.404 * 1.1518+0.892 * 0.9026+0.115 * 0.8179
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1498+4.679 * 0.0819-0.327 * 0.7644
=-2.01

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $8,427 Mil.
Revenue was 9171.33956386 + 8403.58744395 + 9680.75117371 + 9195.43973941 = $36,451 Mil.
Gross Profit was 6048.28660436 + 5260.0896861 + 6505.47730829 + 6216.61237785 = $24,030 Mil.
Total Current Assets was $28,218 Mil.
Total Assets was $84,296 Mil.
Property, Plant and Equipment(Net PPE) was $14,516 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,571 Mil.
Selling, General & Admin. Expense(SGA) was $14,016 Mil.
Total Current Liabilities was $21,489 Mil.
Long-Term Debt was $22,891 Mil.
Net Income was 232.087227414 + 12091.180867 + 1616.58841941 + 653.094462541 = $14,593 Mil.
Non Operating Income was -1.55763239875 + 1294.46935725 + -40.6885758998 + 16.2866449511 = $1,269 Mil.
Cash Flow from Operations was 338.00623053 + 553.064275037 + 3458.52895149 + 2073.28990228 = $6,423 Mil.
Accounts Receivable was $8,663 Mil.
Revenue was 9409.47546531 + 9323.92026578 + 11302.7823241 + 10349.7615262 = $40,386 Mil.
Gross Profit was 6495.76988156 + 6428.57142857 + 7168.57610475 + 6993.64069952 = $27,087 Mil.
Total Current Assets was $22,932 Mil.
Total Assets was $65,736 Mil.
Property, Plant and Equipment(Net PPE) was $14,665 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,058 Mil.
Selling, General & Admin. Expense(SGA) was $13,506 Mil.
Total Current Liabilities was $20,731 Mil.
Long-Term Debt was $24,547 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)
=(8426.79127726 / 36451.1179209) / (8663.28257191 / 40385.9395814)
=0.2311806 / 0.21451234
=1.0777

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)
=(5260.0896861 / 40385.9395814) / (6048.28660436 / 36451.1179209)
=0.67069278 / 0.65925182
=1.0174

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 - (28218.0685358 + 14515.576324) / 84295.9501558) / (1 - (22932.3181049 + 14664.9746193) / 65736.0406091)
=0.49305222 / 0.42805663
=1.1518

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
=36451.1179209 / 40385.9395814
=0.9026

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))
=(2057.83614009 / (2057.83614009 + 14664.9746193)) / (2570.84650823 / (2570.84650823 + 14515.576324))
=0.12305564 / 0.15046137
=0.8179

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)
=(14016.1391615 / 36451.1179209) / (13506.1114402 / 40385.9395814)
=0.38451877 / 0.33442608
=1.1498

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)
=((22890.9657321 + 21489.0965732) / 84295.9501558) / ((24546.5313029 + 20730.964467) / 65736.0406091)
=0.52647918 / 0.68877735
=0.7644

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
=(14592.9509763 - 1268.5097939 - 6422.88935933) / 84295.9501558
=0.0819

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 -2.01 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.91440.92111.28971.06360.88950.89160.99790.76470.96111.033
GMI 1.00230.99461.01751.04650.99561.0251.00151.02941.03560.9918
AQI 1.05311.10211.03211.0251.17551.09350.9691.16480.93240.9739
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 0.9290.93360.96031.04771.07551.32780.69211.07010.96211.1203
LVGI 0.96250.86671.19231.14120.97931.04131.01351.03671.0081.0354
TATA -0.0620.0262-0.0475-0.0673-0.0581-0.1244-0.03870.0037-0.0492-0.0594
M-score -2.82-2.15-2.46-2.94-2.57-3.22-2.64-2.62-2.73-2.93

GlaxoSmithKline PLC Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.9931.03610.93020.98611.03651.01421.05670.94961.04551.0777
GMI 1.04511.02341.01521.03671.0271.03631.03490.99041.01021.0174
AQI 1.17371.19971.01060.93240.97190.91620.8980.97391.06581.1518
SGI 0.95030.97360.98510.99010.99750.97270.94890.90280.89010.9026
DEPI 0.90520.70370.46441.08241.24661.53522.32190.87831.06660.8179
SGAI 1.06361.05570.97750.96180.98231.01021.08051.1211.12991.1498
LVGI 1.0511.00271.0271.0080.9971.00671.03441.03540.78480.7644
TATA -0.0099-0.0146-0.076-0.047-0.0489-0.0356-0.0303-0.06090.07850.0819
M-score -2.52-2.49-2.97-2.72-2.64-2.61-2.51-2.96-2.08-2.01
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