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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 -2.52 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was -2.46. The lowest was -3.11. And the median was -2.72.
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 * 1.0908||+||0.528 * 0.9898||+||0.404 * 1.0337||+||0.892 * 0.9545||+||0.115 * 0.9903|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0386||+||4.679 * -0.0165||-||0.327 * 1.0183|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $31,836 Mil.|
Revenue was 27699 + 23721 + 24924 + 23408 = $99,752 Mil.
Gross Profit was 14316 + 11380 + 12132 + 10678 = $48,506 Mil.
Total Current Assets was $51,350 Mil.
Total Assets was $126,223 Mil.
Property, Plant and Equipment(Net PPE) was $13,821 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,678 Mil.
Selling, General & Admin. Expense(SGA) was $22,975 Mil.
Total Current Liabilities was $40,154 Mil.
Long-Term Debt was $32,856 Mil.
Net Income was 6184 + 4041 + 3226 + 3032 = $16,483 Mil.
Non Operating Income was 296 + 239 + 319 + 221 = $1,075 Mil.
Cash Flow from Operations was 6528 + 3760 + 3174 + 4023 = $17,485 Mil.
|Accounts Receivable was $30,578 Mil.
Revenue was 29304 + 24747 + 25783 + 24673 = $104,507 Mil.
Gross Profit was 15167 + 11732 + 12281 + 11118 = $50,298 Mil.
Total Current Assets was $49,433 Mil.
Total Assets was $119,213 Mil.
Property, Plant and Equipment(Net PPE) was $13,996 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,676 Mil.
Selling, General & Admin. Expense(SGA) was $23,176 Mil.
Total Current Liabilities was $43,625 Mil.
Long-Term Debt was $24,088 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(31836 / 99752)||/||(30578 / 104507)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(11380 / 104507)||/||(14316 / 99752)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (51350 + 13821) / 126223)||/||(1 - (49433 + 13996) / 119213)|
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.
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))|
|=||(4676 / (4676 + 13996))||/||(4678 / (4678 + 13821))|
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)|
|=||(22975 / 99752)||/||(23176 / 104507)|
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)|
|=||((32856 + 40154) / 126223)||/||((24088 + 43625) / 119213)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(16483 - 1075||-||17485)||/||126223|
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 -2.52 suggests that the company will not be a manipulator.
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
International Business Machines Corp Annual Data
International Business Machines Corp Quarterly Data