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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 -4.21. 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 * 1.0752||+||0.528 * 1.0353||+||0.404 * 0.898||+||0.892 * 0.9489||+||0.115 * 2.3219|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0822||+||4.679 * -0.0303||-||0.327 * 1.0344|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $8,445 Mil.|
Revenue was 9195.43973941 + 9409.47546531 + 9323.92026578 + 11302.7823241 = $39,232 Mil.
Gross Profit was 6216.61237785 + 6495.76988156 + 6428.57142857 + 7168.57610475 = $26,310 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 $13,630 Mil.
Total Current Liabilities was $24,870 Mil.
Long-Term Debt was $22,181 Mil.
Net Income was 653.094462541 + 1106.59898477 + 1109.6345515 + 4027.82324059 = $6,897 Mil.
Non Operating Income was 16.2866449511 + 13.5363790186 + 1.66112956811 + 368.248772504 = $400 Mil.
Cash Flow from Operations was 2073.28990228 + 1296.10829103 + 1539.86710963 + 3579.37806874 = $8,489 Mil.
|Accounts Receivable was $8,277 Mil.
Revenue was 10349.7615262 + 10244.5820433 + 9760.18099548 + 10988.6914378 = $41,343 Mil.
Gross Profit was 6993.64069952 + 7191.9504644 + 6779.78883861 + 7739.90306947 = $28,705 Mil.
Total Current Assets was $21,418 Mil.
Total Assets was $65,358 Mil.
Property, Plant and Equipment(Net PPE) was $13,936 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,965 Mil.
Selling, General & Admin. Expense(SGA) was $13,273 Mil.
Total Current Liabilities was $20,401 Mil.
Long-Term Debt was $24,889 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)|
|=||(8444.62540717 / 39231.6177946)||/||(8276.62957075 / 41343.2160029)|
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)|
|=||(6495.76988156 / 41343.2160029)||/||(6216.61237785 / 39231.6177946)|
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 - (24203.5830619 + 14377.8501629) / 65640.0651466)||/||(1 - (21418.1240064 + 13936.4069952) / 65357.7106518)|
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))|
|=||(3965.20178631 / (3965.20178631 + 13936.4069952))||/||(1516.19515056 / (1516.19515056 + 14377.8501629))|
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)|
|=||(13630.4000323 / 39231.6177946)||/||(13272.6970257 / 41343.2160029)|
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)|
|=||((22180.781759 + 24869.7068404) / 65640.0651466)||/||((24888.7122417 + 20400.63593) / 65357.7106518)|
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|
|=||(6897.1512394 - 399.732926042||-||8488.64337169)||/||65640.0651466|
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 -2.49 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