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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

IBM' s 10-Year Beneish M-Score Range
Min: -3.22   Max: -2.46
Current: -2.53

-3.22
-2.46

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was -2.46. The lowest was -3.22. And the median was -2.70.


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 * 1.099+0.528 * 0.9867+0.404 * 1.066+0.892 * 0.9572+0.115 * 1.0057
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0883+4.679 * -0.0178-0.327 * 1.0839
=-2.53

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $29,661 Mil.
Revenue was 22484 + 27699 + 23720 + 24924 = $98,827 Mil.
Gross Profit was 10543 + 14315 + 11380 + 12132 = $48,370 Mil.
Total Current Assets was $47,959 Mil.
Total Assets was $122,646 Mil.
Property, Plant and Equipment(Net PPE) was $13,683 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,666 Mil.
Selling, General & Admin. Expense(SGA) was $24,213 Mil.
Total Current Liabilities was $41,058 Mil.
Long-Term Debt was $34,668 Mil.
Net Income was 2384 + 6185 + 4041 + 3226 = $15,836 Mil.
Non Operating Income was 332 + 315 + 252 + 338 = $1,237 Mil.
Cash Flow from Operations was 3326 + 6528 + 3760 + 3174 = $16,788 Mil.
Accounts Receivable was $28,196 Mil.
Revenue was 23408 + 29304 + 24748 + 25783 = $103,243 Mil.
Gross Profit was 10678 + 15167 + 11732 + 12281 = $49,858 Mil.
Total Current Assets was $48,949 Mil.
Total Assets was $117,258 Mil.
Property, Plant and Equipment(Net PPE) was $13,597 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,672 Mil.
Selling, General & Admin. Expense(SGA) was $23,243 Mil.
Total Current Liabilities was $42,122 Mil.
Long-Term Debt was $24,672 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)
=(29661 / 98827) / (28196 / 103243)
=0.30013053 / 0.27310326
=1.099

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)
=(14315 / 103243) / (10543 / 98827)
=0.48291894 / 0.48944114
=0.9867

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 - (47959 + 13683) / 122646) / (1 - (48949 + 13597) / 117258)
=0.49739902 / 0.46659503
=1.066

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
=98827 / 103243
=0.9572

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))
=(4672 / (4672 + 13597)) / (4666 / (4666 + 13683))
=0.25573376 / 0.25429179
=1.0057

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)
=(24213 / 98827) / (23243 / 103243)
=0.2450039 / 0.22512906
=1.0883

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)
=((34668 + 41058) / 122646) / ((24672 + 42122) / 117258)
=0.61743555 / 0.56963278
=1.0839

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
=(15836 - 1237 - 16788) / 122646
=-0.0178

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 -2.53 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.90040.91741.09560.99240.91241.05231.01010.97831.05821.0907
GMI 1.00290.92150.9570.99160.95870.96360.99240.98250.97440.9898
AQI 1.01570.99890.97581.01330.9740.99821.07220.98171.05541.0336
SGI 1.08040.94641.00321.08051.0490.9241.04291.07060.97750.9545
DEPI 1.02490.89331.06751.00050.92951.05841.02120.99121.02830.9903
SGAI 1.04111.12160.94751.00771.01060.96960.99931.00931.02131.0454
LVGI 0.94110.97211.09111.07171.06330.89371.03521.01461.01781.0184
TATA -0.0793-0.0939-0.0643-0.0602-0.0724-0.0674-0.0587-0.044-0.0411-0.017
M-score -2.85-3.11-2.74-2.72-2.92-2.79-2.69-2.67-2.64-2.52

International Business Machines Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.99371.00331.08911.05821.08851.11261.09351.09081.0991.0867
GMI 0.97960.97790.97930.97440.97550.97630.97790.98980.98670.9896
AQI 1.00471.00211.00221.05541.02411.01321.03421.03361.0661.0724
SGI 1.05281.01470.98350.97750.96510.9650.96820.95450.95720.9598
DEPI 1.00241.00511.03121.02830.99250.98521.00750.99031.00571.0114
SGAI 1.01991.00491.02481.02821.02521.07121.02791.04541.08831.0008
LVGI 1.00821.02771.01031.01781.02711.04541.0421.01841.08391.0517
TATA -0.0419-0.0474-0.0517-0.0411-0.0392-0.0339-0.0193-0.017-0.0178-0.014
M-score -2.65-2.71-2.67-2.64-2.63-2.60-2.53-2.52-2.53-2.49
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