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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.92 (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 -2.92 suggests that the company is not a manipulator.

IBM' s 10-Year Beneish M-Score Range
Min: -3.64   Max: 16.29
Current: -2.92

-3.64
16.29

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was 16.29. The lowest was -3.64. And the median was -2.75.


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 * 1.0357+0.528 * 0.9959+0.404 * 1.0048+0.892 * 0.896+0.115 * 0.9169
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0453+4.679 * -0.078-0.327 * 0.9936
=-2.92

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $27,910 Mil.
Revenue was 20813 + 19590 + 24113 + 22397 = $86,913 Mil.
Gross Profit was 10390 + 9452 + 12862 + 10874 = $43,578 Mil.
Total Current Assets was $45,186 Mil.
Total Assets was $112,729 Mil.
Property, Plant and Equipment(Net PPE) was $10,702 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,114 Mil.
Selling, General & Admin. Expense(SGA) was $21,547 Mil.
Total Current Liabilities was $35,535 Mil.
Long-Term Debt was $33,339 Mil.
Net Income was 3449 + 2328 + 5483 + 18 = $11,278 Mil.
Non Operating Income was 411 + 298 + 1679 + 228 = $2,616 Mil.
Cash Flow from Operations was 3884 + 3610 + 6059 + 3904 = $17,457 Mil.
Accounts Receivable was $30,077 Mil.
Revenue was 24047 + 22236 + 27385 + 23338 = $97,006 Mil.
Gross Profit was 12044 + 10627 + 14337 + 11429 = $48,437 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 $23,006 Mil.
Total Current Liabilities was $42,433 Mil.
Long-Term Debt was $34,008 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)
=(27910 / 86913) / (30077 / 97006)
=0.32112572 / 0.31005299
=1.0357

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)
=(9452 / 97006) / (10390 / 86913)
=0.49931963 / 0.50139795
=0.9959

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 - (45186 + 10702) / 112729) / (1 - (48182 + 13748) / 124314)
=0.50422695 / 0.50182602
=1.0048

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
=86913 / 97006
=0.896

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))
=(4696 / (4696 + 13748)) / (4114 / (4114 + 10702))
=0.25460854 / 0.27767279
=0.9169

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)
=(21547 / 86913) / (23006 / 97006)
=0.24791458 / 0.23716059
=1.0453

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)
=((33339 + 35535) / 112729) / ((34008 + 42433) / 124314)
=0.61096967 / 0.61490259
=0.9936

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
=(11278 - 2616 - 17457) / 112729
=-0.078

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 -2.92 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.91471.09720.98432.10140.46650.091510.42830.15140.897921.3159
GMI 0.92150.9570.99160.95870.96360.99240.98250.97440.97250.9896
AQI 0.99890.97581.01330.9740.99821.07220.98171.05541.03371.0086
SGI 0.94641.00321.08051.0490.9241.04291.07060.97750.94120.9433
DEPI 0.89331.06751.00050.92951.05841.02120.99121.02830.99030.8592
SGAI 1.12160.94751.00770.98410.97521.00671.00661.02121.0511.0391
LVGI 0.97211.09111.07171.06330.89371.03521.01461.01781.01831.0984
TATA -0.0939-0.0643-0.0602-0.0693-0.0806-0.0579-0.0428-0.0402-0.0165-0.0633
M-score -3.11-2.73-2.73-1.81-3.39-3.536.03-3.47-2.7215.81

International Business Machines Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.17480.16560.14740.891715.872616.725117.488421.4651.01951.0357
GMI 0.97550.97630.97320.98140.97410.97240.98170.98060.9880.9959
AQI 1.02411.01321.03431.03371.0661.07241.06561.00860.99081.0048
SGI 0.9650.9650.96450.94780.94810.94750.95140.93680.9210.896
DEPI 0.99260.98521.00730.99031.00571.01140.84250.85920.8730.9169
SGAI 1.02291.06841.01771.07411.10941.02161.05861.03470.9871.0453
LVGI 1.02711.04541.0421.01831.08391.05171.09981.09841.0110.9936
TATA -0.0383-0.0331-0.0187-0.0165-0.0174-0.0135-0.049-0.0633-0.0693-0.078
M-score -3.47-3.47-3.40-2.7211.0411.8712.3715.93-2.88-2.92
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