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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-2.68 (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 -2.56 suggests that the company is not a manipulator.

GSK' s 10-Year Beneish M-Score Range
Min: -4.26   Max: 1.07
Current: -2.68

-4.26
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.26. And the median was -2.68.


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 * 1.0289+0.528 * 1.0366+0.404 * 0.9162+0.892 * 0.9865+0.115 * 1.8318
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0118+4.679 * -0.0357-0.327 * 1.0067
=-2.56

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $8,737 Mil.
Revenue was 9489.76109215 + 9402.01005025 + 11377.2652389 + 10483.0917874 = $40,752 Mil.
Gross Profit was 6551.19453925 + 6482.4120603 + 7215.815486 + 7083.73590982 = $27,333 Mil.
Total Current Assets was $23,128 Mil.
Total Assets was $66,297 Mil.
Property, Plant and Equipment(Net PPE) was $14,790 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,082 Mil.
Selling, General & Admin. Expense(SGA) was $13,628 Mil.
Total Current Liabilities was $20,908 Mil.
Long-Term Debt was $24,756 Mil.
Net Income was 1116.04095563 + 1118.9279732 + 4054.36573311 + 1560.38647343 = $7,850 Mil.
Non Operating Income was 13.6518771331 + 1.67504187605 + 370.675453048 + 22.5442834138 = $409 Mil.
Cash Flow from Operations was 1307.16723549 + 1552.7638191 + 3602.96540362 + 3344.60547504 = $9,808 Mil.
Accounts Receivable was $8,608 Mil.
Revenue was 10042.4886191 + 9909.64777948 + 10865.8146965 + 10493.5691318 = $41,312 Mil.
Gross Profit was 7050.07587253 + 6883.61408882 + 7653.35463259 + 7135.04823151 = $28,722 Mil.
Total Current Assets was $20,388 Mil.
Total Assets was $63,822 Mil.
Property, Plant and Equipment(Net PPE) was $13,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,976 Mil.
Selling, General & Admin. Expense(SGA) was $13,654 Mil.
Total Current Liabilities was $18,933 Mil.
Long-Term Debt was $24,733 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)
=(8737.20136519 / 40752.1281687) / (8608.49772382 / 41311.5202269)
=0.21439865 / 0.20838008
=1.0289

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)
=(6482.4120603 / 41311.5202269) / (6551.19453925 / 40752.1281687)
=0.69525625 / 0.67071732
=1.0366

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 - (23127.9863481 + 14790.1023891) / 66296.9283276) / (1 - (20388.4673748 + 13616.0849772) / 63822.4582701)
=0.42805663 / 0.46720084
=0.9162

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
=40752.1281687 / 41311.5202269
=0.9865

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))
=(3975.85738521 / (3975.85738521 + 13616.0849772)) / (2081.64198571 / (2081.64198571 + 14790.1023891))
=0.22600446 / 0.12338037
=1.8318

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)
=(13627.5627048 / 40752.1281687) / (13654.006749 / 41311.5202269)
=0.33440125 / 0.3305133
=1.0118

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)
=((24755.9726962 + 20907.8498294) / 66296.9283276) / ((24732.9286798 + 18933.23217) / 63822.4582701)
=0.68877735 / 0.68418174
=1.0067

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
=(7849.72113537 - 408.546655471 - 9807.50193325) / 66296.9283276
=-0.0357

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 -2.56 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.00330.99991.02081.07551.06520.88670.89221.00340.97830.9853
GMI 1.0081.00230.99461.01751.04650.99561.0251.00151.02771.0373
AQI 1.25671.05311.10211.03211.0251.17551.09350.9691.16460.9326
SGI 0.9611.02071.18780.98320.78621.30230.97720.94960.99281.0342
DEPI 0.96761.01770.98471.05111.02430.790.91231.11911.27150.8004
SGAI 1.0190.9290.93360.96031.04771.07551.32780.69211.06410.9677
LVGI 1.10540.96250.86671.19231.14120.97931.04131.01351.03681.0079
TATA -0.0654-0.0620.0262-0.0475-0.0673-0.0581-0.1244-0.03870.0039-0.0492
M-score -2.75-2.70-2.08-2.68-2.94-2.55-3.21-2.65-2.40-2.72

GlaxoSmithKline PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.95510.94081.02381.00850.99721.01990.94761.02511.02791.0289
GMI 0.99060.99941.0041.02911.04471.02311.01511.03741.02771.0366
AQI 0.99070.97811.15611.16461.17371.21.01060.93260.97190.9162
SGI 0.99620.97590.95120.96310.95010.96650.98260.9940.99890.9865
DEPI 0.83280.97011.31360.79720.74540.58750.41211.38811.50951.8318
SGAI 0.69580.81660.86731.06781.06191.05380.97560.96290.98361.0118
LVGI 0.99071.03111.02291.03681.0511.00251.0271.00790.9971.0067
TATA -0.0296-0.03640.008-0.0336-0.0478-0.0537-0.1126-0.0468-0.0485-0.0357
M-score -2.64-2.72-2.35-2.63-2.71-2.71-3.13-2.64-2.62-2.56
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