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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-3.04 (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 -2.88 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: -3.04

-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 -2.74.


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 * 0.9653+0.528 * 0.9911+0.404 * 1.0078+0.892 * 0.8723+0.115 * 1.1039
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0228+4.679 * -0.0577-0.327 * 0.9594
=-2.88

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $8,918 Mil.
Revenue was 19280 + 20813 + 19590 + 24113 = $83,796 Mil.
Gross Profit was 9436 + 10390 + 9452 + 12862 = $42,140 Mil.
Total Current Assets was $42,112 Mil.
Total Assets was $108,649 Mil.
Property, Plant and Equipment(Net PPE) was $10,661 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,911 Mil.
Selling, General & Admin. Expense(SGA) was $20,698 Mil.
Total Current Liabilities was $33,732 Mil.
Long-Term Debt was $32,122 Mil.
Net Income was 2950 + 3449 + 2328 + 5483 = $14,210 Mil.
Non Operating Income was 304 + 411 + 298 + 1679 = $2,692 Mil.
Cash Flow from Operations was 4235 + 3884 + 3610 + 6059 = $17,788 Mil.
Accounts Receivable was $10,591 Mil.
Revenue was 22397 + 24047 + 22236 + 27385 = $96,065 Mil.
Gross Profit was 10874 + 12044 + 10627 + 14337 = $47,882 Mil.
Total Current Assets was $47,164 Mil.
Total Assets was $118,911 Mil.
Property, Plant and Equipment(Net PPE) was $11,068 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,660 Mil.
Selling, General & Admin. Expense(SGA) was $23,199 Mil.
Total Current Liabilities was $42,306 Mil.
Long-Term Debt was $32,821 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)
=(8918 / 83796) / (10591 / 96065)
=0.10642513 / 0.11024827
=0.9653

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)
=(10390 / 96065) / (9436 / 83796)
=0.49843335 / 0.50288797
=0.9911

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 - (42112 + 10661) / 108649) / (1 - (47164 + 11068) / 118911)
=0.51427993 / 0.51028921
=1.0078

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
=83796 / 96065
=0.8723

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))
=(4660 / (4660 + 11068)) / (3911 / (3911 + 10661))
=0.29628688 / 0.26839144
=1.1039

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)
=(20698 / 83796) / (23199 / 96065)
=0.24700463 / 0.24149274
=1.0228

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)
=((32122 + 33732) / 108649) / ((32821 + 42306) / 118911)
=0.60611695 / 0.63179184
=0.9594

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
=(14210 - 2692 - 17788) / 108649
=-0.0577

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 -2.88 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 1.09720.98430.92111.06440.9660.98811.02941.00491.0554
GMI 0.9570.99160.95870.96360.99240.98250.95790.98910.9896
AQI 0.97581.01330.9740.99821.07220.98171.05541.03371.0086
SGI 1.00321.08051.0490.9241.0431.07050.96220.95620.9433
DEPI 1.06751.00050.92951.05841.02120.99121.02830.99030.8592
SGAI 0.94751.00770.98410.97521.02030.99311.03341.03861.0391
LVGI 1.09111.07171.06330.89371.03521.01461.01781.01831.0984
TATA -0.0697-0.0603-0.0693-0.0806-0.0587-0.0428-0.0402-0.0165-0.0633
M-score -2.76-2.73-2.89-2.84-2.73-2.65-2.68-2.60-2.83

International Business Machines Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.0280.99790.97580.97730.94841.06281.10631.07380.96530.9022
GMI 0.95630.99830.9910.98940.99910.98060.9880.99590.99111.0048
AQI 1.03431.03371.0661.07241.06561.00860.99081.00481.00781.0623
SGI 0.94890.96290.96330.96280.9670.93680.9210.8960.87230.8809
DEPI 1.00730.99031.00571.01140.84250.85920.8730.91691.10391.3962
SGAI 1.03041.06141.09611.00911.0541.01670.96911.0261.02281.0115
LVGI 1.0421.01831.08391.05171.09981.09841.0110.99360.95940.9643
TATA -0.0187-0.0165-0.0174-0.0135-0.049-0.0633-0.0693-0.078-0.05770.001
M-score -2.61-2.60-2.64-2.59-2.82-2.83-2.80-2.88-2.88-2.59
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