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GlaxoSmithKline PLC (NYSE:GSK)
Beneish M-Score
-1.95 (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 -2.08 signals that the company is a manipulator.

GSK' s 10-Year Beneish M-Score Range
Min: -4.32   Max: 1.07
Current: -1.95

-4.32
1.07

During the past 13 years, the highest Beneish M-Score of GlaxoSmithKline PLC was 1.07. The lowest was -4.32. And the median was -2.67.


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 * 1.0455+0.528 * 1.0102+0.404 * 1.0658+0.892 * 0.8901+0.115 * 1.0666
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1299+4.679 * 0.0785-0.327 * 0.7848
=-2.08

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $8,389 Mil.
Revenue was 8403.58744395 + 9680.75117371 + 9195.43973941 + 9409.47546531 = $36,689 Mil.
Gross Profit was 5260.0896861 + 6505.47730829 + 6216.61237785 + 6495.76988156 = $24,478 Mil.
Total Current Assets was $31,187 Mil.
Total Assets was $86,691 Mil.
Property, Plant and Equipment(Net PPE) was $14,413 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,076 Mil.
Selling, General & Admin. Expense(SGA) was $13,535 Mil.
Total Current Liabilities was $23,596 Mil.
Long-Term Debt was $22,752 Mil.
Net Income was 12091.180867 + 1616.58841941 + 653.094462541 + 1106.59898477 = $15,467 Mil.
Non Operating Income was 1294.46935725 + -40.6885758998 + 16.2866449511 + 13.5363790186 = $1,284 Mil.
Cash Flow from Operations was 553.064275037 + 3458.52895149 + 2073.28990228 + 1296.10829103 = $7,381 Mil.
Accounts Receivable was $9,015 Mil.
Revenue was 9323.92026578 + 11302.7823241 + 10349.7615262 + 10244.5820433 = $41,221 Mil.
Gross Profit was 6428.57142857 + 7168.57610475 + 6993.64069952 + 7191.9504644 = $27,783 Mil.
Total Current Assets was $22,002 Mil.
Total Assets was $65,958 Mil.
Property, Plant and Equipment(Net PPE) was $14,623 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,269 Mil.
Selling, General & Admin. Expense(SGA) was $13,459 Mil.
Total Current Liabilities was $19,380 Mil.
Long-Term Debt was $25,551 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)
=(8388.63976084 / 36689.2538224) / (9014.95016611 / 41221.0461594)
=0.22864024 / 0.21869775
=1.0455

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)
=(6505.47730829 / 41221.0461594) / (5260.0896861 / 36689.2538224)
=0.67399402 / 0.66716945
=1.0102

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 - (31186.8460389 + 14412.5560538) / 86690.5829596) / (1 - (22001.6611296 + 14622.923588) / 65958.4717608)
=0.47399821 / 0.44473267
=1.0658

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
=36689.2538224 / 41221.0461594
=0.8901

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))
=(2268.51961198 / (2268.51961198 + 14622.923588)) / (2076.08078563 / (2076.08078563 + 14412.5560538))
=0.13429993 / 0.12590979
=1.0666

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)
=(13535.3525967 / 36689.2538224) / (13459.2946371 / 41221.0461594)
=0.36891872 / 0.32651512
=1.1299

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)
=((22751.8684604 + 23596.4125561) / 86690.5829596) / ((25551.4950166 + 19380.3986711) / 65958.4717608)
=0.53464032 / 0.6812149
=0.7848

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
=(15467.4627337 - 1283.60380532 - 7380.99141984) / 86690.5829596
=0.0785

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 -2.08 signals that the company is likely to 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.91440.92111.28971.06360.88950.89160.99790.97410.75451.033
GMI 1.00230.99461.01751.04650.99561.00991.00041.04411.03730.9918
AQI 1.05311.10211.03211.0251.17551.09350.9691.16460.93260.9739
SGI 0.981.2071.0050.78931.27270.96180.96460.99941.01590.83
DEPI 1.01770.98471.05111.02430.790.91231.11910.98961.02840.976
SGAI 0.9290.93360.96031.04771.07551.35970.7011.0260.96771.1203
LVGI 0.96250.86671.19231.14120.97931.04131.01351.03681.00791.0354
TATA -0.0620.0262-0.0475-0.0673-0.0581-0.1244-0.03870.0039-0.0492-0.0594
M-score -2.82-2.15-2.46-2.94-2.57-3.24-2.65-2.41-2.92-2.93

GlaxoSmithKline PLC Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.00930.9931.03610.93020.77411.03651.01421.05670.94961.0455
GMI 1.04441.05681.03071.0191.03841.02831.03721.03530.99041.0102
AQI 1.16461.17371.21.01060.93260.97190.91620.8980.97391.0658
SGI 0.96450.95030.97360.98510.99010.99750.97270.94890.90280.8901
DEPI 1.01580.90520.70370.46441.08241.24661.53522.32190.87831.0666
SGAI 1.02521.03151.03870.97420.96730.98661.01311.08221.1211.1299
LVGI 1.03681.0511.00251.0271.00790.9971.00671.03441.03540.7848
TATA 0.0041-0.0101-0.0152-0.077-0.047-0.0489-0.0356-0.0303-0.06090.0785
M-score -2.41-2.51-2.49-2.97-2.91-2.64-2.61-2.51-2.96-2.08
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