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Hospira Inc (NYSE:HSP)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

HSP' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -1.04
Current: -2.76

-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 * 0.9773+0.528 * 0.7728+0.404 * 0.8778+0.892 * 1.069+0.115 * 1.0869
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0091+4.679 * -0.035-0.327 * 0.9967
=-2.76

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $793 Mil.
Revenue was 1135.8 + 1050.8 + 1084.4 + 1008.2 = $4,279 Mil.
Gross Profit was 400 + 369.6 + 321.6 + 290.2 = $1,381 Mil.
Total Current Assets was $3,061 Mil.
Total Assets was $6,402 Mil.
Property, Plant and Equipment(Net PPE) was $1,656 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $765 Mil.
Total Current Liabilities was $1,192 Mil.
Long-Term Debt was $1,749 Mil.
Net Income was 70.9 + 67.9 + 33.5 + 1.9 = $174 Mil.
Non Operating Income was 0.8 + 2 + -7.6 + -39 = $-44 Mil.
Cash Flow from Operations was 157.2 + 18.3 + 255.9 + 10.9 = $442 Mil.
Accounts Receivable was $759 Mil.
Revenue was 1026.2 + 884 + 1098.9 + 994 = $4,003 Mil.
Gross Profit was 318.7 + 150.1 + 315.6 + 214.3 = $999 Mil.
Total Current Assets was $2,758 Mil.
Total Assets was $6,015 Mil.
Property, Plant and Equipment(Net PPE) was $1,453 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $709 Mil.
Total Current Liabilities was $1,470 Mil.
Long-Term Debt was $1,302 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)
=(792.6 / 4279.2) / (758.7 / 4003.1)
=0.18522154 / 0.18952812
=0.9773

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)
=(369.6 / 4003.1) / (400 / 4279.2)
=0.24948165 / 0.32281735
=0.7728

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 - (3060.7 + 1655.6) / 6401.8) / (1 - (2758 + 1452.8) / 6014.9)
=0.26328533 / 0.29993849
=0.8778

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
=4279.2 / 4003.1
=1.069

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))
=(251.7 / (251.7 + 1452.8)) / (260.3 / (260.3 + 1655.6))
=0.14766794 / 0.13586304
=1.0869

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)
=(764.7 / 4279.2) / (708.9 / 4003.1)
=0.17870163 / 0.17708776
=1.0091

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)
=((1748.9 + 1191.5) / 6401.8) / ((1301.9 + 1470) / 6014.9)
=0.45930832 / 0.46083892
=0.9967

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
=(174.2 - -43.8 - 442.3) / 6401.8
=-0.035

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 -2.76 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.85591.11081.07430.98641.00231.04551.03510.95630.96630.9773
GMI 1.1741.30121.34771.26611.34421.1741.00661.00790.77060.7728
AQI 0.86080.84030.88110.96441.01040.95370.98390.92420.87760.8778
SGI 1.02780.99550.99311.00860.99741.00331.00250.97821.03971.069
DEPI 1.0381.00931.07731.08671.05661.06021.03051.04051.05911.0869
SGAI 0.96511.04061.06731.06991.05351.05361.08331.10391.03571.0091
LVGI 1.04621.06921.03841.01451.01631.02871.02491.04881.02380.9967
TATA -0.1083-0.1112-0.1197-0.0679-0.0763-0.0544-0.0187-0.0432-0.0201-0.035
M-score -3.06-2.84-2.86-2.68-2.66-2.63-2.55-2.80-2.75-2.76
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