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HP Inc (NYSE:HPQ)
Beneish M-Score
-2.15 (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.

HP Inc has a M-score of -3.48 suggests that the company is not a manipulator.

HPQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.68   Max: -1.8
Current: -2.15

-3.68
-1.8

During the past 13 years, the highest Beneish M-Score of HP Inc was -1.80. The lowest was -3.68. And the median was -2.63.


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 HP Inc 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 * 0.2127+0.528 * 0.9+0.404 * 0.7339+0.892 * 1.4775+0.115 * 0.621
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1428+4.679 * -0.0638-0.327 * 1.54
=-3.48

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $4,008 Mil.
Revenue was 11892 + 11588 + 12246 + 64158 = $99,884 Mil.
Gross Profit was 2172 + 2250 + 2285 + 17186 = $23,893 Mil.
Total Current Assets was $17,402 Mil.
Total Assets was $27,224 Mil.
Property, Plant and Equipment(Net PPE) was $1,607 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,256 Mil.
Selling, General & Admin. Expense(SGA) was $11,603 Mil.
Total Current Liabilities was $18,114 Mil.
Long-Term Debt was $6,760 Mil.
Net Income was 783 + 629 + 592 + 1323 = $3,327 Mil.
Non Operating Income was -36 + 0 + 0 + -42 = $-78 Mil.
Cash Flow from Operations was 1065 + 1575 + -108 + 2609 = $5,141 Mil.
Accounts Receivable was $12,753 Mil.
Revenue was 12362 + 12977 + 13858 + 28406 = $67,603 Mil.
Gross Profit was 2326 + 2562 + 2685 + 6981 = $14,554 Mil.
Total Current Assets was $51,998 Mil.
Total Assets was $107,033 Mil.
Property, Plant and Equipment(Net PPE) was $11,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,129 Mil.
Selling, General & Admin. Expense(SGA) was $6,872 Mil.
Total Current Liabilities was $49,033 Mil.
Long-Term Debt was $14,468 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)
=(4008 / 99884) / (12753 / 67603)
=0.04012655 / 0.18864547
=0.2127

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)
=(14554 / 67603) / (23893 / 99884)
=0.2152863 / 0.23920748
=0.9

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 - (17402 + 1607) / 27224) / (1 - (51998 + 11028) / 107033)
=0.3017558 / 0.41115357
=0.7339

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
=99884 / 67603
=1.4775

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))
=(4129 / (4129 + 11028)) / (1256 / (1256 + 1607))
=0.27241539 / 0.43870066
=0.621

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)
=(11603 / 99884) / (6872 / 67603)
=0.11616475 / 0.10165229
=1.1428

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)
=((6760 + 18114) / 27224) / ((14468 + 49033) / 107033)
=0.91367911 / 0.59328431
=1.54

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
=(3327 - -78 - 5141) / 27224
=-0.0638

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.

HP Inc has a M-score of -3.48 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 local exchange's currency.

HP Inc Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
DSRI 1.08481.11141.00941.01580.97670.95181.03710.87780.37621.8269
GMI 0.97551.02671.02640.98531.02161.00861.0070.96650.99681.2842
AQI 1.1531.1860.99171.05871.08680.83060.97740.97421.24060.6053
SGI 1.13781.1350.96781.10021.00960.94590.9330.99250.92730.4667
DEPI 0.99131.08930.79351.02511.00750.96541.04181.03740.37814.5553
SGAI 0.95380.96030.90051.00351.04881.05121.05331.01410.99760.666
LVGI 1.06691.07190.92811.04631.08521.11670.93410.98510.78941.9275
TATA -0.0326-0.0553-0.0498-0.0254-0.043-0.2135-0.0615-0.0709-0.0181-0.0253
M-score -2.40-2.43-2.71-2.49-2.68-3.69-2.78-2.95-3.11-2.16

HP Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.99870.87781.05141.16411.49050.37620.31950.26020.21271.8269
GMI 0.99710.96650.98511.02561.09020.99680.98370.94920.91.2842
AQI 0.97790.97421.00630.99570.99931.24060.83860.820.73390.6053
SGI 0.99160.99250.86680.74070.60260.92731.04721.21161.47750.4667
DEPI 1.05761.03741.03811.03241.01660.37810.41440.47070.6214.5553
SGAI 1.02361.01410.99510.93930.85480.99761.02241.07111.14280.666
LVGI 0.96810.98510.98210.99451.02690.78941.59551.59651.541.9275
TATA -0.0698-0.0681-0.048-0.0352-0.0181-0.0183-0.0736-0.0929-0.0638-0.0241
M-score -2.81-2.94-2.77-2.70-2.40-3.11-3.75-3.77-3.48-2.15
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