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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

IBM' s 10-Year Beneish M-Score Range
Min: -3.86   Max: 6.27
Current: -2.59

-3.86
6.27

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was 6.27. The lowest was -3.86. And the median was -2.73.


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 * 0.9804+0.528 * 0.9895+0.404 * 1.0724+0.892 * 0.9598+0.115 * 1.0114
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0056+4.679 * -0.0137-0.327 * 1.0517
=-2.59

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $11,457 Mil.
Revenue was 24364 + 22484 + 27699 + 23721 = $98,268 Mil.
Gross Profit was 11975 + 10543 + 14316 + 11380 = $48,214 Mil.
Total Current Assets was $48,182 Mil.
Total Assets was $124,314 Mil.
Property, Plant and Equipment(Net PPE) was $13,748 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,696 Mil.
Selling, General & Admin. Expense(SGA) was $22,834 Mil.
Total Current Liabilities was $42,433 Mil.
Long-Term Debt was $34,008 Mil.
Net Income was 4137 + 2384 + 6184 + 4041 = $16,746 Mil.
Non Operating Income was 392 + 332 + 296 + 239 = $1,259 Mil.
Cash Flow from Operations was 3579 + 3326 + 6528 + 3760 = $17,193 Mil.
Accounts Receivable was $12,175 Mil.
Revenue was 24924 + 23408 + 29304 + 24747 = $102,383 Mil.
Gross Profit was 12132 + 10678 + 15167 + 11731 = $49,708 Mil.
Total Current Assets was $47,911 Mil.
Total Assets was $115,153 Mil.
Property, Plant and Equipment(Net PPE) was $13,356 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,632 Mil.
Selling, General & Admin. Expense(SGA) was $23,657 Mil.
Total Current Liabilities was $41,037 Mil.
Long-Term Debt was $26,292 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)
=(11457 / 98268) / (12175 / 102383)
=0.11658933 / 0.11891623
=0.9804

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)
=(10543 / 102383) / (11975 / 98268)
=0.48551029 / 0.49063785
=0.9895

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 - (48182 + 13748) / 124314) / (1 - (47911 + 13356) / 115153)
=0.50182602 / 0.46795133
=1.0724

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
=98268 / 102383
=0.9598

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))
=(4632 / (4632 + 13356)) / (4696 / (4696 + 13748))
=0.257505 / 0.25460854
=1.0114

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)
=(22834 / 98268) / (23657 / 102383)
=0.23236455 / 0.23106375
=1.0056

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)
=((34008 + 42433) / 124314) / ((26292 + 41037) / 115153)
=0.61490259 / 0.58469167
=1.0517

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
=(16746 - 1259 - 17193) / 124314
=-0.0137

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 -2.59 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 1.00680.097510.2950.98430.92111.06440.9660.98811.01340.1323
GMI 0.990.93350.9570.99160.95870.96360.99240.98250.97440.9898
AQI 1.00521.0170.97581.01330.9740.99821.07220.98171.05541.0337
SGI 1.08040.94641.00321.08051.0490.9241.04291.07060.97750.9545
DEPI 0.9910.89331.06751.00050.92951.05841.02120.99121.02830.9903
SGAI 1.00511.16180.94751.00771.01060.96960.9861.00661.02121.0386
LVGI 0.95220.9561.09111.07171.06330.89371.03521.01461.01781.0183
TATA -0.0724-0.095-0.0643-0.0556-0.0724-0.0814-0.0579-0.0428-0.0402-0.0165
M-score -2.73-3.865.73-2.71-2.91-2.84-2.73-2.65-2.67-3.40

International Business Machines Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.00321.11021.01341.06941.06250.14680.13230.1430.98046.5794
GMI 0.97790.97930.97430.97550.97640.97790.98980.98670.98950.9895
AQI 1.00211.00211.05541.02411.01321.03431.03371.0661.07241.0656
SGI 1.01470.98350.97750.9650.9650.96820.95450.95720.95980.9565
DEPI 1.00511.03131.02830.99260.98521.00730.99031.00571.01141.0342
SGAI 1.00881.0311.02141.0181.06341.01931.03851.08841.00561.0463
LVGI 1.02771.01031.01781.02711.04541.0421.01831.08391.05171.0998
TATA -0.0465-0.051-0.0402-0.0383-0.0331-0.0187-0.0165-0.0174-0.0137-0.0166
M-score -2.70-2.65-2.67-2.64-2.64-3.39-3.40-3.41-2.592.52
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