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Hospira Inc (NYSE:HSP)
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.

Hospira Inc has a M-score of -2.77 suggests that the company is not a manipulator.

HSP' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -1.29
Current: -2.77

-3.04
-1.29

During the past 13 years, the highest Beneish M-Score of Hospira Inc was -1.29. The lowest was -3.04. And the median was -2.76.


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 * 0.9398+0.528 * 0.7595+0.404 * 0.9886+0.892 * 1.1151+0.115 * 1.1301
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0158+4.679 * -0.0482-0.327 * 0.9729
=-2.77

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $602 Mil.
Revenue was 1126.5 + 1150.6 + 1135.8 + 1050.8 = $4,464 Mil.
Gross Profit was 385.6 + 431.3 + 400 + 369.6 = $1,587 Mil.
Total Current Assets was $2,954 Mil.
Total Assets was $6,650 Mil.
Property, Plant and Equipment(Net PPE) was $1,817 Mil.
Depreciation, Depletion and Amortization(DDA) was $258 Mil.
Selling, General & Admin. Expense(SGA) was $841 Mil.
Total Current Liabilities was $1,300 Mil.
Long-Term Debt was $1,749 Mil.
Net Income was 35.8 + 158.6 + 70.9 + 67.9 = $333 Mil.
Non Operating Income was -6.3 + -4.3 + 0.8 + 2 = $-8 Mil.
Cash Flow from Operations was 327.1 + 158.8 + 157.2 + 18.3 = $661 Mil.
Accounts Receivable was $574 Mil.
Revenue was 1084.4 + 1008.2 + 1026.2 + 884 = $4,003 Mil.
Gross Profit was 321.6 + 290.2 + 318.7 + 150.1 = $1,081 Mil.
Total Current Assets was $2,839 Mil.
Total Assets was $6,179 Mil.
Property, Plant and Equipment(Net PPE) was $1,574 Mil.
Depreciation, Depletion and Amortization(DDA) was $258 Mil.
Selling, General & Admin. Expense(SGA) was $743 Mil.
Total Current Liabilities was $1,165 Mil.
Long-Term Debt was $1,747 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)
=(601.9 / 4463.7) / (574.3 / 4002.8)
=0.13484329 / 0.14347457
=0.9398

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)
=(431.3 / 4002.8) / (385.6 / 4463.7)
=0.26996103 / 0.35542263
=0.7595

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 - (2954.2 + 1816.7) / 6650) / (1 - (2838.5 + 1574.2) / 6178.9)
=0.28257143 / 0.28584376
=0.9886

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
=4463.7 / 4002.8
=1.1151

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))
=(257.5 / (257.5 + 1574.2)) / (258.1 / (258.1 + 1816.7))
=0.14057979 / 0.12439753
=1.1301

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)
=(841.2 / 4463.7) / (742.6 / 4002.8)
=0.18845353 / 0.18552014
=1.0158

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)
=((1749.2 + 1300.1) / 6650) / ((1747 + 1165.1) / 6178.9)
=0.45854135 / 0.47129748
=0.9729

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
=(333.2 - -7.8 - 661.4) / 6650
=-0.0482

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 -2.77 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.

Hospira Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.00941.00151.30430.99940.78971.20291.02121.00230.90760.9398
GMI 0.920.92531.02260.93790.97020.97111.12231.26611.0080.7595
AQI 1.00541.1783.86120.88280.97331.13940.84690.96440.92420.9886
SGI 0.99311.02351.27811.05621.06881.00981.03571.00860.97821.1151
DEPI 0.97821.03990.84250.89151.04461.03571.01431.08671.04051.1301
SGAI 1.23751.11941.0640.95980.98111.08030.91161.06991.10391.0157
LVGI 0.87840.99221.27510.96940.82850.93011.01211.01451.04880.9729
TATA -0.1198-0.0652-0.0824-0.0512-0.09620.013-0.0784-0.0689-0.0432-0.0482
M-score -3.08-2.74-1.29-2.75-3.02-2.17-2.78-2.67-2.84-2.77

Hospira Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.9661.00230.98931.05471.07420.90760.86550.91030.87990.9398
GMI 1.34771.26611.34421.1741.00661.00790.77060.77280.77680.7595
AQI 0.88110.96441.01040.95370.98390.92420.87760.87780.9850.9886
SGI 0.99311.00860.99741.00331.00250.97821.03971.0691.10061.1151
DEPI 1.07731.08671.05661.06021.03051.04051.05911.08691.15361.1301
SGAI 1.06731.06991.05351.05361.08331.10391.03571.00910.99941.0158
LVGI 1.03841.01451.01631.02871.02491.04881.02380.99670.98210.9729
TATA -0.1197-0.0689-0.0773-0.0553-0.0197-0.0432-0.0201-0.035-0.0385-0.0482
M-score -2.96-2.67-2.68-2.62-2.52-2.84-2.84-2.82-2.78-2.77
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