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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 -2.53 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 -3.22. And the median was -2.70.
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|
|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
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)|
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)|
|=||(14315 / 103243)||/||(10543 / 98827)|
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 - (47959 + 13683) / 122646)||/||(1 - (48949 + 13597) / 117258)|
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))|
|=||(4672 / (4672 + 13597))||/||(4666 / (4666 + 13683))|
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)|
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)|
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|
|=||(15836 - 1237||-||16788)||/||122646|
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.
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