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HP Inc (NYSE:HPQ)
Beneish M-Score
-3.84 (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 -3.84 suggests that the company is not a manipulator.

HPQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.89   Max: -1.51
Current: -3.84

-3.89
-1.51

During the past 13 years, the highest Beneish M-Score of HP Inc was -1.51. The lowest was -3.89. And the median was -2.61.


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 * 0.3486+0.528 * 1.0069+0.404 * 0.82+0.892 * 0.9043+0.115 * 0.4707
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9924+4.679 * -0.0754-0.327 * 1.5965
=-3.84

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

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $3,884 Mil.
Revenue was 11588 + 12246 + 25714 + 25349 = $74,897 Mil.
Gross Profit was 2250 + 2285 + 6351 + 6032 = $16,918 Mil.
Total Current Assets was $15,385 Mil.
Total Assets was $25,523 Mil.
Property, Plant and Equipment(Net PPE) was $1,572 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,194 Mil.
Selling, General & Admin. Expense(SGA) was $8,258 Mil.
Total Current Liabilities was $16,862 Mil.
Long-Term Debt was $6,708 Mil.
Net Income was 629 + 592 + 1323 + 854 = $3,398 Mil.
Non Operating Income was 0 + 0 + -318 + -108 = $-426 Mil.
Cash Flow from Operations was 1575 + -108 + 2609 + 1673 = $5,749 Mil.
Accounts Receivable was $12,320 Mil.
Revenue was 12977 + 13858 + 28406 + 27585 = $82,826 Mil.
Gross Profit was 2562 + 2685 + 6981 + 6611 = $18,839 Mil.
Total Current Assets was $48,883 Mil.
Total Assets was $101,396 Mil.
Property, Plant and Equipment(Net PPE) was $11,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,161 Mil.
Selling, General & Admin. Expense(SGA) was $9,202 Mil.
Total Current Liabilities was $43,186 Mil.
Long-Term Debt was $15,464 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)
=(3884 / 74897) / (12320 / 82826)
=0.05185788 / 0.14874556
=0.3486

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)
=(18839 / 82826) / (16918 / 74897)
=0.22745273 / 0.22588355
=1.0069

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 - (15385 + 1572) / 25523) / (1 - (48883 + 11014) / 101396)
=0.33561885 / 0.4092765
=0.82

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
=74897 / 82826
=0.9043

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))
=(4161 / (4161 + 11014)) / (2194 / (2194 + 1572))
=0.27420099 / 0.58258099
=0.4707

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)
=(8258 / 74897) / (9202 / 82826)
=0.11025809 / 0.11110038
=0.9924

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)
=((6708 + 16862) / 25523) / ((15464 + 43186) / 101396)
=0.92348078 / 0.57842518
=1.5965

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
=(3398 - -426 - 5749) / 25523
=-0.0754

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 -3.84 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.

HP Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 1.03851.08481.11141.00941.01580.97670.95181.03710.87781.0418
GMI 0.96330.99590.99721.03520.99311.01741.00481.0070.96650.9968
AQI 0.91991.1531.1860.99171.05871.08680.83060.97740.97421.0185
SGI 1.05721.13781.1350.96781.10021.00960.94590.9330.99250.9273
DEPI 1.04390.99131.08930.79431.02411.00750.96541.04181.03741.0316
SGAI 0.95280.95380.94430.91570.9851.05981.05991.05331.01410.9976
LVGI 1.03751.06691.07190.92811.04631.08521.11670.93410.98511.0334
TATA -0.0632-0.0267-0.0594-0.0498-0.0254-0.043-0.2135-0.0615-0.0709-0.0181
M-score -2.74-2.36-2.47-2.70-2.48-2.69-3.69-2.78-2.95-2.59

HP Inc Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
DSRI 1.00341.0110.99870.87781.05141.16411.25031.38230.42620.3486
GMI 1.00160.99980.99710.96650.98511.02561.03581.05511.04271.0069
AQI 0.96280.96620.97790.97421.00630.99570.99931.01850.83860.82
SGI 0.94450.96760.99160.99250.86680.74070.71840.69890.78520.9043
DEPI 1.03211.04781.05761.03741.03811.03241.01661.03160.41440.4707
SGAI 1.03861.03281.02361.01410.99510.93930.92760.92890.95070.9924
LVGI 0.9460.95780.96810.98510.98210.99451.02691.03341.59551.5965
TATA -0.0641-0.0574-0.0698-0.0681-0.048-0.0352-0.0165-0.0141-0.0561-0.0754
M-score -2.83-2.77-2.81-2.94-2.77-2.70-2.55-2.42-3.76-3.84
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