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HP Inc (NYSE:HPQ)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

HPQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.69   Max: -1.8
Current: -2.59

-3.69
-1.8

During the past 13 years, the highest Beneish M-Score of HP Inc 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 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 * 1.0418+0.528 * 0.9968+0.404 * 1.0185+0.892 * 0.9273+0.115 * 1.0316
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9976+4.679 * -0.0171-0.327 * 1.0334
=-2.59

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $13,363 Mil.
Revenue was 25714 + 25349 + 25453 + 26839 = $103,355 Mil.
Gross Profit was 6351 + 6032 + 6108 + 6268 = $24,759 Mil.
Total Current Assets was $51,787 Mil.
Total Assets was $106,882 Mil.
Property, Plant and Equipment(Net PPE) was $11,090 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,061 Mil.
Selling, General & Admin. Expense(SGA) was $12,353 Mil.
Total Current Liabilities was $42,191 Mil.
Long-Term Debt was $21,780 Mil.
Net Income was 1323 + 854 + 1011 + 1366 = $4,554 Mil.
Non Operating Income was 0 + -108 + 0 + 0 = $-108 Mil.
Cash Flow from Operations was 2609 + 1673 + 1464 + 744 = $6,490 Mil.
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.



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)
=(13363 / 103355) / (13832 / 111454)
=0.12929225 / 0.12410501
=1.0418

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)
=(6032 / 111454) / (6351 / 103355)
=0.23879807 / 0.239553
=0.9968

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 - (51787 + 11090) / 106882) / (1 - (50145 + 11340) / 103206)
=0.41171572 / 0.40424975
=1.0185

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
=103355 / 111454
=0.9273

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))
=(4334 / (4334 + 11340)) / (4061 / (4061 + 11090))
=0.27650887 / 0.26803511
=1.0316

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)
=(12353 / 103355) / (13353 / 111454)
=0.1195201 / 0.11980727
=0.9976

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)
=((21780 + 42191) / 106882) / ((16039 + 43735) / 103206)
=0.59851986 / 0.57917175
=1.0334

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
=(4554 - -108 - 6490) / 106882
=-0.0171

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 -2.59 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 0.96330.97551.02671.02640.99311.01741.00481.0070.96650.9968
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 0.95280.95380.96030.90050.9851.05981.05991.05331.01410.9976
LVGI 1.03751.06691.07190.92811.04631.08521.11670.93410.98511.0334
TATA -0.0632-0.0325-0.0553-0.0498-0.0254-0.043-0.2135-0.0615-0.0709-0.0181
M-score -2.74-2.40-2.43-2.71-2.48-2.69-3.69-2.78-2.95-2.59

HP Inc Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 0.98981.03711.00341.0110.99870.87780.92740.89040.95021.0418
GMI 0.96061.0071.00160.99980.99710.96650.96550.97270.98030.9968
AQI 0.89520.97740.96280.96620.97790.97421.00630.99570.99931.0185
SGI 0.92330.9330.94450.96760.99160.99250.98260.96840.94530.9273
DEPI 1.0221.04181.03211.04781.05761.03741.03811.03241.01661.0316
SGAI 1.02571.05331.03861.03281.02361.01411.02061.00610.99710.9976
LVGI 1.0170.93410.9460.95780.96810.98510.98210.99451.02691.0334
TATA -0.1512-0.0614-0.064-0.0574-0.0713-0.0756-0.0557-0.0429-0.0224-0.0171
M-score -3.34-2.78-2.83-2.77-2.82-2.97-2.83-2.82-2.70-2.59
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