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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.84 (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.

International Business Machines Corp has a M-score of -2.84 suggests that the company is not a manipulator.

IBM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.39   Max: -1.65
Current: -2.84

-3.39
-1.65

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was -1.65. The lowest was -3.39. 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 International Business Machines Corp 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 * 0.9774+0.528 * 1.011+0.404 * 1.0299+0.892 * 0.8936+0.115 * 1.1038
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0779+4.679 * -0.055-0.327 * 1.0098
=-2.84

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $10,084 Mil.
Revenue was 18684 + 22059 + 19280 + 20813 = $80,836 Mil.
Gross Profit was 8686 + 11406 + 9436 + 10390 = $39,918 Mil.
Total Current Assets was $47,623 Mil.
Total Assets was $118,856 Mil.
Property, Plant and Equipment(Net PPE) was $10,910 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,911 Mil.
Selling, General & Admin. Expense(SGA) was $21,146 Mil.
Total Current Liabilities was $34,664 Mil.
Long-Term Debt was $40,254 Mil.
Net Income was 2014 + 4463 + 2950 + 3449 = $12,876 Mil.
Non Operating Income was -59 + -290 + 304 + 411 = $366 Mil.
Cash Flow from Operations was 5645 + 5279 + 4235 + 3884 = $19,043 Mil.
Accounts Receivable was $11,546 Mil.
Revenue was 19590 + 24113 + 22397 + 24364 = $90,464 Mil.
Gross Profit was 9452 + 12862 + 10874 + 11975 = $45,163 Mil.
Total Current Assets was $46,316 Mil.
Total Assets was $112,037 Mil.
Property, Plant and Equipment(Net PPE) was $10,509 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,319 Mil.
Selling, General & Admin. Expense(SGA) was $21,955 Mil.
Total Current Liabilities was $35,640 Mil.
Long-Term Debt was $34,295 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)
=(10084 / 80836) / (11546 / 90464)
=0.1247464 / 0.12763088
=0.9774

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)
=(11406 / 90464) / (8686 / 80836)
=0.49923727 / 0.49381464
=1.011

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 - (47623 + 10910) / 118856) / (1 - (46316 + 10509) / 112037)
=0.50753012 / 0.49280149
=1.0299

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
=80836 / 90464
=0.8936

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))
=(4319 / (4319 + 10509)) / (3911 / (3911 + 10910))
=0.29127327 / 0.26388233
=1.1038

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)
=(21146 / 80836) / (21955 / 90464)
=0.26159137 / 0.24269323
=1.0779

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)
=((40254 + 34664) / 118856) / ((34295 + 35640) / 112037)
=0.63032577 / 0.62421343
=1.0098

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
=(12876 - 366 - 19043) / 118856
=-0.055

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.

International Business Machines Corp has a M-score of -2.84 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.

International Business Machines Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.09720.98430.92111.06440.9660.98811.01341.00671.07030.9022
GMI 0.9570.99160.95870.96360.99240.98250.97440.98980.97231.0048
AQI 0.97581.01330.97410.99821.07220.98171.05541.03371.00861.0623
SGI 1.00321.08051.0490.9241.04291.07060.97750.95450.93020.8809
DEPI 1.06751.00050.92941.05841.02120.99121.02830.99030.85921.1132
SGAI 0.94751.00771.01060.94961.00671.00661.02121.03861.05141.0321
LVGI 1.09111.07171.06330.89371.03521.01461.01781.01831.09840.9643
TATA -0.0697-0.0603-0.0724-0.0805-0.0579-0.0428-0.0402-0.0165-0.0633-0.0411
M-score -2.76-2.73-2.91-2.84-2.73-2.65-2.67-2.60-2.84-2.82

International Business Machines Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00660.9820.98040.95891.06381.11311.08770.97420.90770.9774
GMI 0.98970.98670.98950.98950.98150.98040.97850.97860.99541.011
AQI 1.03371.0661.07241.06561.00860.99081.00481.00781.06231.0299
SGI 0.95450.95720.95980.95650.93590.91540.88440.86440.87560.8936
DEPI 0.99031.00571.01140.84250.85920.8730.91691.10391.11321.1038
SGAI 1.03851.08840.99851.02161.07171.00781.07451.09691.01271.0779
LVGI 1.01831.08391.05171.09981.09841.0110.99360.95940.96431.0098
TATA -0.0165-0.0173-0.0134-0.0489-0.0632-0.0693-0.078-0.0577-0.0411-0.055
M-score -2.60-2.64-2.59-2.82-2.84-2.81-2.90-2.89-2.82-2.84
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