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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.86 (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 -2.86 suggests that the company is not a manipulator.

IBM' s 10-Year Beneish M-Score Range
Min: -3.76   Max: 6.25
Current: -2.86

-3.76
6.25

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was 6.25. The lowest was -3.76. And the median was -2.76.


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 * 0.8992+0.528 * 1.0086+0.404 * 1.0656+0.892 * 0.9707+0.115 * 0.8425
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0477+4.679 * -0.0489-0.327 * 1.0998
=-2.86

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,469 Mil.
Revenue was 22397 + 24364 + 22484 + 28769 = $98,014 Mil.
Gross Profit was 10874 + 11975 + 10543 + 14158 = $47,550 Mil.
Total Current Assets was $47,164 Mil.
Total Assets was $118,911 Mil.
Property, Plant and Equipment(Net PPE) was $11,068 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,660 Mil.
Selling, General & Admin. Expense(SGA) was $23,237 Mil.
Total Current Liabilities was $42,306 Mil.
Long-Term Debt was $32,821 Mil.
Net Income was 18 + 4137 + 2384 + 6184 = $12,723 Mil.
Non Operating Income was 228 + 370 + 310 + 293 = $1,201 Mil.
Cash Flow from Operations was 3904 + 3579 + 3326 + 6528 = $17,337 Mil.
Accounts Receivable was $1,683 Mil.
Revenue was 23338 + 24924 + 23408 + 29304 = $100,974 Mil.
Gross Profit was 11429 + 12132 + 10678 + 15167 = $49,406 Mil.
Total Current Assets was $47,533 Mil.
Total Assets was $117,845 Mil.
Property, Plant and Equipment(Net PPE) was $13,877 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,616 Mil.
Selling, General & Admin. Expense(SGA) was $22,849 Mil.
Total Current Liabilities was $39,222 Mil.
Long-Term Debt was $28,478 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)
=(1469 / 98014) / (1683 / 100974)
=0.01498765 / 0.01666766
=0.8992

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)
=(11975 / 100974) / (10874 / 98014)
=0.48929427 / 0.48513478
=1.0086

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 - (47164 + 11068) / 118911) / (1 - (47533 + 13877) / 117845)
=0.51028921 / 0.47889176
=1.0656

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
=98014 / 100974
=0.9707

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))
=(4616 / (4616 + 13877)) / (4660 / (4660 + 11068))
=0.24960796 / 0.29628688
=0.8425

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)
=(23237 / 98014) / (22849 / 100974)
=0.23707838 / 0.22628597
=1.0477

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)
=((32821 + 42306) / 118911) / ((28478 + 39222) / 117845)
=0.63179184 / 0.57448343
=1.0998

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
=(12723 - 1201 - 17337) / 118911
=-0.0489

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 -2.86 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 1.00680.91471.09720.98430.92111.06440.9660.98810.15140.886
GMI 1.00290.92150.9570.99160.95870.96360.99240.98250.97440.9898
AQI 1.01570.99890.97581.01330.9740.99821.07220.98171.05541.0337
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 1.04111.12160.94751.00771.01060.94961.00671.00661.02121.0387
LVGI 0.94110.97211.09111.07171.06330.89371.03521.01461.01781.0183
TATA -0.0793-0.0939-0.0643-0.0602-0.0724-0.0806-0.0579-0.0428-0.0402-0.0165
M-score -2.75-3.11-2.73-2.73-2.91-2.84-2.73-2.65-3.47-2.71

International Business Machines Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.00321.11020.15141.06941.06250.14740.880.1420.97360.8992
GMI 0.97790.97930.97430.97550.97630.97320.99880.99580.99871.0086
AQI 1.00211.00211.05541.02411.01321.03431.03371.0661.07241.0656
SGI 1.01470.98350.97750.9650.9650.96450.96110.96390.96650.9707
DEPI 1.00511.03131.02830.99260.98521.00730.99031.00571.01140.8425
SGAI 1.00231.02261.02131.02291.06841.01771.06151.10091.01121.0477
LVGI 1.02771.01031.01781.02711.04541.0421.01831.08391.05171.0998
TATA -0.0465-0.051-0.0402-0.0383-0.0331-0.0187-0.0165-0.0173-0.0134-0.0489
M-score -2.70-2.65-3.47-2.64-2.64-3.40-2.71-3.40-2.59-2.86
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