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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 -4.15. And the median was -2.79.
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|
|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
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)|
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)|
|=||(6048.28660436 / 27928.8354705)||/||(6016.87116564 / 26972.1662716)|
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 - (26044.4785276 + 14716.2576687) / 81472.392638)||/||(1 - (24203.5830619 + 14377.8501629) / 65640.0651466)|
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))|
|=||(1516.19515056 / (1516.19515056 + 14377.8501629))||/||(2309.22104111 / (2309.22104111 + 14716.2576687))|
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)|
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)|
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|
|=||(13148.4214686 - 1286.77675553||-||5087.3295184)||/||81472.392638|
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.
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