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Hewlett-Packard Co (NYSE:HPQ)
Beneish M-Score
-2.83 (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 -2.83 suggests that the company is not a manipulator.

HPQ' s 10-Year Beneish M-Score Range
Min: -3.87   Max: -1.61
Current: -2.83

-3.87
-1.61

During the past 13 years, the highest Beneish M-Score of Hewlett-Packard Co was -1.61. The lowest was -3.87. And the median was -2.59.


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 * 0.9981+0.528 * 1.0016+0.404 * 0.9628+0.892 * 0.9445+0.115 * 1.0321
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0386+4.679 * -0.064-0.327 * 0.946
=-2.83

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $16,546 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.
Net Income was 1425 + 1414 + 1390 + 1077 = $5,306 Mil.
Non Operating Income was 0 + 0 + 0 + -9 = $-9 Mil.
Cash Flow from Operations was 2990 + 2816 + 2674 + 3556 = $12,036 Mil.
Accounts Receivable was $17,552 Mil.
Revenue was 28359 + 29959 + 29669 + 30693 = $118,680 Mil.
Gross Profit was 6330 + 7248 + 6849 + 7152 = $27,579 Mil.
Total Current Assets was $49,552 Mil.
Total Assets was $106,701 Mil.
Property, Plant and Equipment(Net PPE) was $11,686 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,955 Mil.
Selling, General & Admin. Expense(SGA) was $13,433 Mil.
Total Current Liabilities was $44,386 Mil.
Long-Term Debt was $21,752 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)
=(16546 / 112093) / (17552 / 118680)
=0.14760957 / 0.1478935
=0.9981

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)
=(6694 / 118680) / (6418 / 112093)
=0.23238119 / 0.23200378
=1.0016

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 - (50684 + 11259) / 105025) / (1 - (49552 + 11686) / 106701)
=0.41020709 / 0.42607848
=0.9628

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
=112093 / 118680
=0.9445

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))
=(4955 / (4955 + 11686)) / (4565 / (4565 + 11259))
=0.29775855 / 0.28848584
=1.0321

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)
=(13177 / 112093) / (13433 / 118680)
=0.11755417 / 0.11318672
=1.0386

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)
=((17971 + 43611) / 105025) / ((21752 + 44386) / 106701)
=0.58635563 / 0.61984424
=0.946

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
=(5306 - -9 - 12036) / 105025
=-0.064

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 -2.83 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.01950.88861.01071.02230.78551.35860.99040.76830.97191.0369
GMI 1.09991.02270.96330.97551.02671.02640.98531.02161.00861.007
AQI 0.95641.01970.91991.1531.1860.99171.05871.08680.83060.9774
SGI 1.09371.0851.05721.13781.1350.96781.10021.00960.94590.933
DEPI 1.05920.99361.04390.99131.08930.79351.02511.00750.96541.0418
SGAI 0.87150.98210.95280.95380.96030.90051.00351.04881.05121.0533
LVGI 0.98371.03341.03751.06691.07190.92811.04631.08521.11670.9341
TATA -0.02-0.0739-0.0632-0.0325-0.0553-0.0498-0.0254-0.043-0.2135-0.0615
M-score -2.40-2.84-2.77-2.45-2.73-2.38-2.52-2.87-3.67-2.78

Hewlett-Packard Co Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.76830.99040.93440.92560.97190.97210.96841.00511.03690.9981
GMI 1.02161.06261.09051.08771.00860.98580.96720.96061.0071.0016
AQI 1.08681.09331.12741.03580.83060.82070.82610.89520.97740.9628
SGI 1.00960.98290.96950.95420.94590.94960.93170.92330.9330.9445
DEPI 1.00751.01581.00560.9830.96540.98520.98831.0221.04181.0321
SGAI 1.04881.08451.08121.07421.05121.02311.01891.02571.05331.0386
LVGI 1.08521.08991.02071.07851.11671.12491.12991.0170.93410.946
TATA -0.043-0.0381-0.0313-0.1227-0.2131-0.2322-0.2486-0.1512-0.0614-0.064
M-score -2.87-2.65-2.63-3.14-3.67-3.76-3.87-3.32-2.78-2.83
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