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Hewlett-Packard Co (NYSE:HPQ)
Beneish M-Score
-2.95 (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.

Hewlett-Packard Co has a M-score of -2.95 suggests that the company is not a manipulator.

HPQ' s 10-Year Beneish M-Score Range
Min: -3.69   Max: -1.8
Current: -2.95

-3.69
-1.8

During the past 13 years, the highest Beneish M-Score of Hewlett-Packard Co was -1.80. The lowest was -3.69. And the median was -2.65.


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 * 0.8778+0.528 * 0.9665+0.404 * 0.9742+0.892 * 0.9925+0.115 * 1.0374
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0141+4.679 * -0.0709-0.327 * 0.9851
=-2.95

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $13,832 Mil.
Revenue was 28406 + 27585 + 27309 + 28154 = $111,454 Mil.
Gross Profit was 6981 + 6611 + 6605 + 6418 = $26,615 Mil.
Total Current Assets was $50,145 Mil.
Total Assets was $103,206 Mil.
Property, Plant and Equipment(Net PPE) was $11,340 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,334 Mil.
Selling, General & Admin. Expense(SGA) was $13,353 Mil.
Total Current Liabilities was $43,735 Mil.
Long-Term Debt was $16,039 Mil.
Net Income was 1330 + 985 + 1273 + 1425 = $5,013 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2701 + 3647 + 2995 + 2990 = $12,333 Mil.
Accounts Receivable was $15,876 Mil.
Revenue was 29131 + 27226 + 27582 + 28359 = $112,298 Mil.
Gross Profit was 6694 + 6367 + 6527 + 6330 = $25,918 Mil.
Total Current Assets was $50,364 Mil.
Total Assets was $105,676 Mil.
Property, Plant and Equipment(Net PPE) was $11,463 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,611 Mil.
Selling, General & Admin. Expense(SGA) was $13,267 Mil.
Total Current Liabilities was $45,521 Mil.
Long-Term Debt was $16,608 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)
=(13832 / 111454) / (15876 / 112298)
=0.12410501 / 0.14137384
=0.8778

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)
=(6611 / 112298) / (6981 / 111454)
=0.23079663 / 0.23879807
=0.9665

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 - (50145 + 11340) / 103206) / (1 - (50364 + 11463) / 105676)
=0.40424975 / 0.41493811
=0.9742

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
=111454 / 112298
=0.9925

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))
=(4611 / (4611 + 11463)) / (4334 / (4334 + 11340))
=0.28686077 / 0.27650887
=1.0374

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)
=(13353 / 111454) / (13267 / 112298)
=0.11980727 / 0.11814102
=1.0141

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)
=((16039 + 43735) / 103206) / ((16608 + 45521) / 105676)
=0.57917175 / 0.58791968
=0.9851

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
=(5013 - 0 - 12333) / 103206
=-0.0709

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 -2.95 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 1.02270.96330.97551.02671.02640.99311.01741.00481.0070.9665
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 0.99361.04390.99131.08930.79431.02411.00750.96541.04181.0374
SGAI 0.98210.95280.95380.96030.90050.9851.05981.05991.05331.0141
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 -2.84-2.74-2.40-2.43-2.71-2.48-2.69-3.69-2.78-2.95

Hewlett-Packard Co Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.90720.95180.94330.94390.98981.03711.00341.0110.99870.8778
GMI 1.08131.00480.98290.96530.95971.0071.00160.99980.99710.9665
AQI 1.03580.83060.82070.82610.89520.97740.96280.96620.97790.9742
SGI 0.95420.94590.94960.93170.92330.9330.94450.96760.99160.9925
DEPI 0.9830.96540.98520.98831.0221.04181.03211.04781.05761.0374
SGAI 1.08941.05991.02931.0231.02781.05331.03861.03281.02361.0141
LVGI 1.07851.11671.12491.12991.0170.93410.9460.95780.96810.9851
TATA -0.1231-0.2135-0.2327-0.2487-0.1513-0.0615-0.0641-0.0574-0.0713-0.0709
M-score -3.17-3.69-3.79-3.89-3.34-2.78-2.83-2.77-2.82-2.95
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