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Hospira Inc (NYSE:HSP)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

HSP' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -1.04
Current: -2.79

-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 -2.72.


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 * 0.8357+0.528 * 0.8046+0.404 * 1.0441+0.892 * 1.0833+0.115 * 1.1903
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0607+4.679 * -0.0372-0.327 * 0.9438
=-2.79

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $588 Mil.
Revenue was 1183.6 + 1174.9 + 1126.5 + 1150.6 = $4,636 Mil.
Gross Profit was 519.4 + 523.5 + 385.6 + 431.3 = $1,860 Mil.
Total Current Assets was $3,010 Mil.
Total Assets was $6,784 Mil.
Property, Plant and Equipment(Net PPE) was $1,909 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $879 Mil.
Total Current Liabilities was $1,193 Mil.
Long-Term Debt was $1,748 Mil.
Net Income was 145.1 + 75.6 + 35.8 + 158.6 = $415 Mil.
Non Operating Income was 2.6 + 3.5 + -6.3 + -4.3 = $-5 Mil.
Cash Flow from Operations was 286.5 + -100.3 + 327.1 + 158.8 = $672 Mil.
Accounts Receivable was $650 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.



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)
=(588 / 4635.6) / (649.5 / 4279.2)
=0.12684442 / 0.15178071
=0.8357

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)
=(523.5 / 4279.2) / (519.4 / 4635.6)
=0.32281735 / 0.40119941
=0.8046

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 - (3009.7 + 1909.3) / 6783.8) / (1 - (3060.7 + 1655.6) / 6401.8)
=0.27489018 / 0.26328533
=1.0441

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
=4635.6 / 4279.2
=1.0833

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))
=(260.3 / (260.3 + 1655.6)) / (246 / (246 + 1909.3))
=0.13586304 / 0.11413724
=1.1903

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)
=(878.7 / 4635.6) / (764.7 / 4279.2)
=0.18955475 / 0.17870163
=1.0607

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)
=((1748.1 + 1192.7) / 6783.8) / ((1748.9 + 1191.5) / 6401.8)
=0.43350335 / 0.45930832
=0.9438

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
=(415.1 - -4.5 - 672.1) / 6783.8
=-0.0372

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 -2.79 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 -0.1198-0.0652-0.0824-0.0512-0.09480.0134-0.0784-0.0679-0.0432-0.0482
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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.98931.05471.07420.90760.86550.91030.87990.93980.97440.8357
GMI 1.34421.1741.00661.00790.77060.77280.77680.75950.82190.8046
AQI 1.01040.95370.98390.92420.87760.87780.9850.98861.03281.0441
SGI 0.99741.00331.00250.97821.03971.0691.10061.11511.10031.0833
DEPI 1.05661.06021.03051.04051.05911.08691.15361.13011.14971.1903
SGAI 1.05351.05361.08331.10391.03571.00910.99941.01581.07541.0607
LVGI 1.01631.02871.02491.04881.02380.99670.98210.97290.96130.9438
TATA -0.0763-0.0544-0.0187-0.0432-0.0201-0.035-0.0385-0.0482-0.0299-0.0372
M-score -2.67-2.62-2.52-2.84-2.84-2.82-2.78-2.77-2.62-2.79
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