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Hewlett-Packard Co (NYSE:HPQ)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

HPQ' s 10-Year Beneish M-Score Range
Min: -3.89   Max: -1.51
Current: -2.8

-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 -2.63.


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 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 * 0.8904+0.528 * 0.9727+0.404 * 0.9957+0.892 * 0.9684+0.115 * 1.0324
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0061+4.679 * -0.0381-0.327 * 0.9945
=-2.80

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $12,320 Mil.
Revenue was 25453 + 26839 + 28406 + 27585 = $108,283 Mil.
Gross Profit was 6108 + 6268 + 6981 + 6611 = $25,968 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 $12,886 Mil.
Total Current Liabilities was $43,186 Mil.
Long-Term Debt was $15,464 Mil.
Net Income was 1011 + 1366 + 1330 + 985 = $4,692 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1464 + 744 + 2701 + 3647 = $8,556 Mil.
Accounts Receivable was $14,288 Mil.
Revenue was 27309 + 28154 + 29131 + 27226 = $111,820 Mil.
Gross Profit was 6605 + 6418 + 6694 + 6367 = $26,084 Mil.
Total Current Assets was $49,883 Mil.
Total Assets was $103,972 Mil.
Property, Plant and Equipment(Net PPE) was $11,350 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,482 Mil.
Selling, General & Admin. Expense(SGA) was $13,226 Mil.
Total Current Liabilities was $43,280 Mil.
Long-Term Debt was $17,190 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)
=(12320 / 108283) / (14288 / 111820)
=0.11377594 / 0.12777678
=0.8904

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)
=(6268 / 111820) / (6108 / 108283)
=0.23326775 / 0.23981604
=0.9727

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 - (48883 + 11014) / 101396) / (1 - (49883 + 11350) / 103972)
=0.4092765 / 0.41106259
=0.9957

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
=108283 / 111820
=0.9684

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))
=(4482 / (4482 + 11350)) / (4161 / (4161 + 11014))
=0.28309752 / 0.27420099
=1.0324

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)
=(12886 / 108283) / (13226 / 111820)
=0.11900298 / 0.11827938
=1.0061

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)
=((15464 + 43186) / 101396) / ((17190 + 43280) / 103972)
=0.57842518 / 0.58159889
=0.9945

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
=(4692 - 0 - 8556) / 101396
=-0.0381

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 -2.80 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

Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15
DSRI 0.94390.98981.03711.00341.0110.99870.87780.92740.89040.9502
GMI 0.96720.96061.0071.00160.99980.99710.96650.96550.97270.9803
AQI 0.82610.89520.97740.96280.96620.97790.97421.00630.99570.9993
SGI 0.93170.92330.9330.94450.96760.99160.99250.98260.96840.9453
DEPI 0.98831.0221.04181.03211.04781.05761.03741.03811.03241.0166
SGAI 1.01891.02571.05331.03861.03281.02361.01411.02061.00610.9971
LVGI 1.12991.0170.93410.9460.95780.96810.98510.98210.99451.0269
TATA -0.2487-0.1513-0.0615-0.0641-0.0574-0.0713-0.0709-0.0509-0.0381-0.0189
M-score -3.89-3.34-2.78-2.83-2.77-2.82-2.95-2.81-2.80-2.68
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