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Hospira Inc (NYSE:HSP)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

HSP' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -1.04
Current: -2.78

-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 * 0.8799+0.528 * 0.7768+0.404 * 0.985+0.892 * 1.1006+0.115 * 1.1536
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9994+4.679 * -0.0385-0.327 * 0.9821
=-2.78

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $610 Mil.
Revenue was 1150.6 + 1135.8 + 1050.8 + 1084.4 = $4,422 Mil.
Gross Profit was 431.3 + 400 + 369.6 + 321.6 = $1,523 Mil.
Total Current Assets was $2,759 Mil.
Total Assets was $6,493 Mil.
Property, Plant and Equipment(Net PPE) was $1,788 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $808 Mil.
Total Current Liabilities was $1,170 Mil.
Long-Term Debt was $1,749 Mil.
Net Income was 158.6 + 70.9 + 67.9 + 33.5 = $331 Mil.
Non Operating Income was -4.3 + 0.8 + 2 + -7.6 = $-9 Mil.
Cash Flow from Operations was 158.8 + 157.2 + 18.3 + 255.9 = $590 Mil.
Accounts Receivable was $630 Mil.
Revenue was 1008.2 + 1026.2 + 884 + 1098.9 = $4,017 Mil.
Gross Profit was 290.2 + 318.7 + 150.1 + 315.6 = $1,075 Mil.
Total Current Assets was $2,710 Mil.
Total Assets was $6,032 Mil.
Property, Plant and Equipment(Net PPE) was $1,487 Mil.
Depreciation, Depletion and Amortization(DDA) was $256 Mil.
Selling, General & Admin. Expense(SGA) was $734 Mil.
Total Current Liabilities was $1,014 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)
=(610.2 / 4421.6) / (630.1 / 4017.3)
=0.13800434 / 0.15684664
=0.8799

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)
=(400 / 4017.3) / (431.3 / 4421.6)
=0.26749309 / 0.34433237
=0.7768

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 - (2759.2 + 1787.7) / 6493.1) / (1 - (2709.7 + 1487) / 6032.2)
=0.29973356 / 0.30428368
=0.985

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
=4421.6 / 4017.3
=1.1006

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))
=(255.5 / (255.5 + 1487)) / (260.3 / (260.3 + 1787.7))
=0.14662841 / 0.12709961
=1.1536

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)
=(807.8 / 4421.6) / (734.4 / 4017.3)
=0.18269405 / 0.18280935
=0.9994

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 + 1169.9) / 6493.1) / ((1747.4 + 1014) / 6032.2)
=0.44956954 / 0.4577766
=0.9821

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
=(330.9 - -9.1 - 590.2) / 6493.1
=-0.0385

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 -2.78 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 1.00941.00151.30430.99940.78971.20291.02121.00230.9076
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 -3.08-2.74-1.29-2.75-3.02-2.17-2.78-2.67-2.84

Hospira Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.06710.9661.00230.98931.05471.07420.90760.86550.91030.8799
GMI 1.30121.34771.26611.34421.1741.00661.00790.77060.77280.7768
AQI 0.84030.88110.96441.01040.95370.98390.92420.87760.87780.985
SGI 0.99550.99311.00860.99741.00331.00250.97821.03971.0691.1006
DEPI 1.00931.07731.08671.05661.06021.03051.04051.05911.08691.1536
SGAI 1.04061.06731.06991.05351.05361.08331.10391.03571.00910.9994
LVGI 1.06921.03841.01451.01631.02871.02491.04881.02380.99670.9821
TATA -0.1112-0.1197-0.0679-0.0763-0.0544-0.0187-0.0432-0.0201-0.035-0.0385
M-score -2.88-2.96-2.67-2.67-2.62-2.52-2.84-2.84-2.82-2.78
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