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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 -0.74. The lowest was -4.21. And the median was -2.66.
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|
|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
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)|
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)|
|=||(6216.61237785 / 41657.3068891)||/||(6505.47730829 / 37609.5866442)|
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 - (22970.2660407 + 14165.8841941) / 63616.5884194)||/||(1 - (24921.4402619 + 14520.4582651) / 68880.5237316)|
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))|
|=||(2159.82962436 / (2159.82962436 + 14520.4582651))||/||(2449.43269183 / (2449.43269183 + 14165.8841941))|
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)|
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)|
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|
|=||(4485.91641821 - -9.20442236198||-||8367.79425443)||/||63616.5884194|
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.
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