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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 1.07. The lowest was -3.78. And the median was -2.67.
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 * 0.9973||+||0.528 * 1.0272||+||0.404 * 1.0632||+||0.892 * 1.0139||+||0.115 * 1.1988|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9122||+||4.679 * -0.0649||-||0.327 * 1.0945|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $8,521 Mil.|
Revenue was 9278.40909091 + 8873.21937322 + 9410.17964072 + 9397.2392638 = $36,959 Mil.
Gross Profit was 6261.36363636 + 5834.75783476 + 5606.28742515 + 6016.87116564 = $23,719 Mil.
Total Current Assets was $23,977 Mil.
Total Assets was $81,857 Mil.
Property, Plant and Equipment(Net PPE) was $14,970 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,149 Mil.
Selling, General & Admin. Expense(SGA) was $12,964 Mil.
Total Current Liabilities was $25,720 Mil.
Long-Term Debt was $21,446 Mil.
Net Income was -617.897727273 + 401.709401709 + -529.94011976 + 825.153374233 = $79 Mil.
Non Operating Income was -2.84090909091 + 0 + -55.3892215569 + -6.13496932515 = $-64 Mil.
Cash Flow from Operations was 1755.68181818 + 716.524216524 + 2247.00598802 + 737.73006135 = $5,457 Mil.
|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.
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)|
|=||(8521.30681818 / 36959.0473687)||/||(8426.79127726 / 36451.1179209)|
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)|
|=||(24030.4659766 / 36451.1179209)||/||(23719.2800619 / 36959.0473687)|
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 - (23977.2727273 + 14970.1704545) / 81856.5340909)||/||(1 - (28218.0685358 + 14515.576324) / 84295.9501558)|
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))|
|=||(2570.84650823 / (2570.84650823 + 14515.576324))||/||(2148.51947372 / (2148.51947372 + 14970.1704545))|
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)|
|=||(12964.2276661 / 36959.0473687)||/||(14016.1391615 / 36451.1179209)|
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)|
|=||((21446.0227273 + 25720.1704545) / 81856.5340909)||/||((22890.9657321 + 21489.0965732) / 84295.9501558)|
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|
|=||(79.0249289093 - -64.3650999729||-||5456.94208408)||/||81856.5340909|
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 -2.73 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