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Hewlett-Packard Co (NYSE:HPQ)
Beneish M-Score
-2.81 (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.

Hewlett-Packard Co has a M-score of -2.81 suggests that the company is not a manipulator.

HPQ' s 10-Year Beneish M-Score Range
Min: -3.89   Max: -1.51
Current: -2.81

-3.89
-1.51

During the past 13 years, the highest Beneish M-Score of Hewlett-Packard Co was -1.51. The lowest was -3.89. And the median was -2.62.


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 Hewlett-Packard Co 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 * 0.9274+0.528 * 0.9655+0.404 * 1.0063+0.892 * 0.9826+0.115 * 1.0381
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0206+4.679 * -0.0509-0.327 * 0.9821
=-2.81

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $12,295 Mil.
Revenue was 26839 + 28406 + 27585 + 27309 = $110,139 Mil.
Gross Profit was 6268 + 6981 + 6611 + 6605 = $26,465 Mil.
Total Current Assets was $48,198 Mil.
Total Assets was $100,861 Mil.
Property, Plant and Equipment(Net PPE) was $11,030 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,245 Mil.
Selling, General & Admin. Expense(SGA) was $13,214 Mil.
Total Current Liabilities was $42,529 Mil.
Long-Term Debt was $15,552 Mil.
Net Income was 1366 + 1330 + 985 + 1273 = $4,954 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 744 + 2701 + 3647 + 2995 = $10,087 Mil.
Accounts Receivable was $13,492 Mil.
Revenue was 28154 + 29131 + 27226 + 27582 = $112,093 Mil.
Gross Profit was 6418 + 6694 + 6367 + 6527 = $26,006 Mil.
Total Current Assets was $50,684 Mil.
Total Assets was $105,025 Mil.
Property, Plant and Equipment(Net PPE) was $11,259 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,565 Mil.
Selling, General & Admin. Expense(SGA) was $13,177 Mil.
Total Current Liabilities was $43,611 Mil.
Long-Term Debt was $17,971 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)
=(12295 / 110139) / (13492 / 112093)
=0.11163167 / 0.12036434
=0.9274

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)
=(6981 / 112093) / (6268 / 110139)
=0.23200378 / 0.24028727
=0.9655

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 - (48198 + 11030) / 100861) / (1 - (50684 + 11259) / 105025)
=0.412776 / 0.41020709
=1.0063

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
=110139 / 112093
=0.9826

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))
=(4565 / (4565 + 11259)) / (4245 / (4245 + 11030))
=0.28848584 / 0.27790507
=1.0381

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)
=(13214 / 110139) / (13177 / 112093)
=0.11997567 / 0.11755417
=1.0206

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)
=((15552 + 42529) / 100861) / ((17971 + 43611) / 105025)
=0.57585192 / 0.58635563
=0.9821

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
=(4954 - 0 - 10087) / 100861
=-0.0509

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.

Hewlett-Packard Co has a M-score of -2.81 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 own currency.

Hewlett-Packard Co Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.89261.03851.08481.11141.00941.01580.97670.95181.03710.8778
GMI 1.02270.96330.97551.02671.02640.98871.01811.00861.0070.9665
AQI 1.01970.91991.1531.1860.99171.05871.08680.83060.97740.9742
SGI 1.0851.05721.13781.1350.96781.10021.00960.94590.9330.9925
DEPI 0.99361.04390.99131.08930.79351.02511.00750.96541.04181.0374
SGAI 0.98210.95280.95380.96030.90050.99541.05741.05121.05331.0141
LVGI 1.03341.03751.06691.07190.92811.04631.08521.11670.93410.9851
TATA -0.0739-0.0632-0.0325-0.0553-0.0498-0.0254-0.043-0.2135-0.0615-0.0709
M-score -2.84-2.74-2.40-2.43-2.71-2.49-2.69-3.69-2.78-2.95

Hewlett-Packard Co Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.95180.94330.94390.98981.03711.00341.0110.99870.87780.9274
GMI 1.00860.98580.96720.96061.0071.00160.99980.99710.96650.9655
AQI 0.83060.82070.82610.89520.97740.96280.96620.97790.97421.0063
SGI 0.94590.94960.93170.92330.9330.94450.96760.99160.99250.9826
DEPI 0.96540.98520.98831.0221.04181.03211.04781.05761.03741.0381
SGAI 1.05121.02311.01891.02571.05331.03861.03281.02361.01411.0206
LVGI 1.11671.12491.12991.0170.93410.9460.95780.96810.98510.9821
TATA -0.2131-0.2322-0.2487-0.1513-0.0615-0.0641-0.0574-0.0713-0.0709-0.0509
M-score -3.68-3.79-3.89-3.34-2.78-2.83-2.77-2.82-2.95-2.81
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