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Hospira Inc (NYSE:HSP)
Beneish M-Score
-2.75 (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.

Hospira Inc has a M-score of -2.75 suggests that the company is not a manipulator.

HSP' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -1.04
Current: -2.75

-3.09
-1.04

During the past 13 years, the highest Beneish M-Score of Hospira Inc was -1.04. The lowest was -3.09. And the median was -2.66.


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 Hospira 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 * 0.9663+0.528 * 0.7706+0.404 * 0.8776+0.892 * 1.0397+0.115 * 1.0591
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0357+4.679 * -0.0201-0.327 * 1.0238
=-2.75

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $702 Mil.
Revenue was 1050.8 + 1084.4 + 1008.2 + 1026.2 = $4,170 Mil.
Gross Profit was 369.6 + 321.6 + 290.2 + 318.7 = $1,300 Mil.
Total Current Assets was $2,804 Mil.
Total Assets was $6,158 Mil.
Property, Plant and Equipment(Net PPE) was $1,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $743 Mil.
Total Current Liabilities was $1,068 Mil.
Long-Term Debt was $1,748 Mil.
Net Income was 67.9 + 33.5 + 1.9 + 32.9 = $136 Mil.
Non Operating Income was 2 + -7.6 + -39 + -10.1 = $-55 Mil.
Cash Flow from Operations was 18.3 + 255.9 + 10.9 + 29.8 = $315 Mil.
Accounts Receivable was $698 Mil.
Revenue was 884 + 1098.9 + 994 + 1033.3 = $4,010 Mil.
Gross Profit was 150.1 + 315.6 + 214.3 + 283.5 = $964 Mil.
Total Current Assets was $2,667 Mil.
Total Assets was $6,069 Mil.
Property, Plant and Equipment(Net PPE) was $1,451 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $690 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $1,705 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)
=(701.6 / 4169.6) / (698.3 / 4010.2)
=0.16826554 / 0.17413097
=0.9663

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)
=(321.6 / 4010.2) / (369.6 / 4169.6)
=0.24026233 / 0.31180449
=0.7706

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 - (2804 + 1616.4) / 6157.7) / (1 - (2667.1 + 1450.5) / 6068.5)
=0.28213456 / 0.32147977
=0.8776

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
=4169.6 / 4010.2
=1.0397

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))
=(249.1 / (249.1 + 1450.5)) / (259.6 / (259.6 + 1616.4))
=0.1465639 / 0.13837953
=1.0591

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)
=(742.6 / 4169.6) / (689.6 / 4010.2)
=0.17809862 / 0.1719615
=1.0357

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)
=((1747.5 + 1067.6) / 6157.7) / ((1704.5 + 1005.2) / 6068.5)
=0.45716745 / 0.44651891
=1.0238

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
=(136.2 - -54.7 - 314.9) / 6157.7
=-0.0201

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.

Hospira Inc has a M-score of -2.75 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.

Hospira Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.00941.00151.30431.06210.80511.3010.98870.98640.9563
GMI 0.920.92531.02260.93790.97020.97111.12231.26611.008
AQI 1.00541.1783.86120.88280.97331.13940.84690.96440.9242
SGI 0.99311.02351.27811.05621.06881.00981.03571.00860.9782
DEPI 0.97821.03990.84250.89151.04461.03571.01431.08671.0405
SGAI 1.23751.11941.0640.95980.98111.08030.91161.06991.1039
LVGI 0.87840.99221.27510.96940.82850.93011.01211.01451.0488
TATA -0.1198-0.0652-0.0824-0.0512-0.09480.0134-0.0784-0.0679-0.0432
M-score -3.08-2.74-1.29-2.69-3.00-2.08-2.81-2.68-2.80

Hospira Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.98870.85591.11081.07430.98641.00231.04551.03510.95630.9663
GMI 1.12231.1741.30121.34771.26611.34421.1741.00661.00790.7706
AQI 0.84690.86080.84030.88110.96441.01040.95370.98390.92420.8776
SGI 1.03571.02780.99550.99311.00860.99741.00331.00250.97821.0397
DEPI 1.01431.0381.00931.07731.08671.05661.06021.03051.04051.0591
SGAI 0.91160.96511.04061.06731.06991.05351.05361.08331.10391.0357
LVGI 1.01211.04621.06921.03841.01451.01631.02871.02491.04881.0238
TATA -0.0784-0.1083-0.1112-0.1197-0.0679-0.0763-0.0544-0.0187-0.0432-0.0201
M-score -2.81-3.06-2.84-2.86-2.68-2.66-2.63-2.55-2.80-2.75
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