Switch to:
Hewlett-Packard Co (NYSE:HPQ)
Beneish M-Score
-2.77 (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 -2.77 suggests that the company is not a manipulator.

HPQ' s 10-Year Beneish M-Score Range
Min: -3.87   Max: -1.63
Current: -2.77

-3.87
-1.63

During the past 13 years, the highest Beneish M-Score of Hewlett-Packard Co was -1.63. The lowest was -3.87. 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 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 * 1.0093+0.528 * 0.9998+0.404 * 0.9662+0.892 * 0.9676+0.115 * 1.0478
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0328+4.679 * -0.0574-0.327 * 0.9578
=-2.77

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $17,400 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.
Net Income was 1273 + 1425 + 1414 + 1390 = $5,502 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2995 + 2990 + 2816 + 2674 = $11,475 Mil.
Accounts Receivable was $17,818 Mil.
Revenue was 27582 + 28359 + 29959 + 29669 = $115,569 Mil.
Gross Profit was 6527 + 6330 + 7248 + 6849 = $26,954 Mil.
Total Current Assets was $49,571 Mil.
Total Assets was $106,254 Mil.
Property, Plant and Equipment(Net PPE) was $11,476 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,840 Mil.
Selling, General & Admin. Expense(SGA) was $13,235 Mil.
Total Current Liabilities was $44,658 Mil.
Long-Term Debt was $19,863 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)
=(17400 / 111820) / (17818 / 115569)
=0.15560723 / 0.15417629
=1.0093

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)
=(6418 / 115569) / (6605 / 111820)
=0.23322863 / 0.23326775
=0.9998

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 - (49883 + 11350) / 103972) / (1 - (49571 + 11476) / 106254)
=0.41106259 / 0.42546163
=0.9662

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
=111820 / 115569
=0.9676

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))
=(4840 / (4840 + 11476)) / (4482 / (4482 + 11350))
=0.29664133 / 0.28309752
=1.0478

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)
=(13226 / 111820) / (13235 / 115569)
=0.11827938 / 0.11452033
=1.0328

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)
=((17190 + 43280) / 103972) / ((19863 + 44658) / 106254)
=0.58159889 / 0.60723361
=0.9578

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
=(5502 - 0 - 11475) / 103972
=-0.0574

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 -2.77 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

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 0.99040.93440.92560.97190.97210.96841.00511.03690.99811.0093
GMI 1.06261.09051.08771.00860.98580.96720.96061.0071.00160.9998
AQI 1.09331.12741.03580.83060.82070.82610.89520.97740.96280.9662
SGI 0.98290.96950.95420.94590.94960.93170.92330.9330.94450.9676
DEPI 1.01581.00560.9830.96540.98520.98831.0221.04181.03211.0478
SGAI 1.08451.08121.07421.05121.02311.01891.02571.05331.03861.0328
LVGI 1.08991.02071.07851.11671.12491.12991.0170.93410.9460.9578
TATA -0.0381-0.0313-0.1227-0.2131-0.2322-0.2487-0.1513-0.0615-0.0641-0.0574
M-score -2.65-2.63-3.14-3.67-3.76-3.87-3.32-2.78-2.83-2.77
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide