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International Business Machines Corp (NYSE:IBM)
Beneish M-Score
-2.77 (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 -2.77 suggests that the company is not a manipulator.

IBM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.55   Max: -1.65
Current: -2.77

-3.55
-1.65

During the past 13 years, the highest Beneish M-Score of International Business Machines Corp was -1.65. The lowest was -3.55. 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 * 0.9797+0.528 * 1.0394+0.404 * 1.0608+0.892 * 0.9572+0.115 * 0.9706
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0429+4.679 * -0.0564-0.327 * 0.9991
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $873 Mil.
Revenue was 19226 + 20238 + 18684 + 22059 = $80,207 Mil.
Gross Profit was 9013 + 9702 + 8686 + 11406 = $38,807 Mil.
Total Current Assets was $41,433 Mil.
Total Assets was $115,606 Mil.
Property, Plant and Equipment(Net PPE) was $11,104 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,244 Mil.
Selling, General & Admin. Expense(SGA) was $20,661 Mil.
Total Current Liabilities was $34,447 Mil.
Long-Term Debt was $35,563 Mil.
Net Income was 2853 + 2504 + 2014 + 4463 = $11,834 Mil.
Non Operating Income was -13 + -66 + -276 + 127 = $-228 Mil.
Cash Flow from Operations was 4213 + 3443 + 5645 + 5279 = $18,580 Mil.
Accounts Receivable was $931 Mil.
Revenue was 19280 + 20813 + 19590 + 24113 = $83,796 Mil.
Gross Profit was 9436 + 10390 + 9452 + 12862 = $42,140 Mil.
Total Current Assets was $42,112 Mil.
Total Assets was $108,649 Mil.
Property, Plant and Equipment(Net PPE) was $10,661 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,911 Mil.
Selling, General & Admin. Expense(SGA) was $20,698 Mil.
Total Current Liabilities was $33,732 Mil.
Long-Term Debt was $32,122 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)
=(873 / 80207) / (931 / 83796)
=0.01088434 / 0.01111032
=0.9797

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)
=(42140 / 83796) / (38807 / 80207)
=0.50288797 / 0.48383558
=1.0394

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 - (41433 + 11104) / 115606) / (1 - (42112 + 10661) / 108649)
=0.54555127 / 0.51427993
=1.0608

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
=80207 / 83796
=0.9572

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))
=(3911 / (3911 + 10661)) / (4244 / (4244 + 11104))
=0.26839144 / 0.27651811
=0.9706

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)
=(20661 / 80207) / (20698 / 83796)
=0.25759597 / 0.24700463
=1.0429

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)
=((35563 + 34447) / 115606) / ((32122 + 33732) / 108649)
=0.60559141 / 0.60611695
=0.9991

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
=(11834 - -228 - 18580) / 115606
=-0.0564

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 -2.77 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 local exchange's currency.

International Business Machines Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.09720.98430.92111.06440.9660.98811.02941.00490.25570.4692
GMI 0.9570.99160.95870.96360.99240.98250.95790.98910.98961.0048
AQI 0.97581.01330.9740.99821.07220.98171.05541.03371.04231.028
SGI 1.00321.08051.0490.9241.0431.07050.96220.95620.94330.8809
DEPI 1.06751.00050.92951.05841.02120.99121.02830.99030.85931.113
SGAI 0.94751.00770.98410.97521.02030.99311.03341.06241.01581.005
LVGI 1.09111.07171.06330.89371.03521.01461.01781.01831.09940.9635
TATA -0.0697-0.0603-0.0693-0.0806-0.0587-0.0428-0.0402-0.0106-0.0571-0.0404
M-score -2.76-2.73-2.89-2.84-2.73-2.65-2.68-2.57-3.52-3.23

International Business Machines Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.13270.13150.25750.26251.71550.72660.46920.63370.5120.9797
GMI 0.98940.99910.98060.9880.99590.99111.00481.01611.02581.0394
AQI 1.07241.06561.04230.99071.00481.00781.0281.02991.06581.0608
SGI 0.96280.9670.93680.9210.8960.87230.88090.89670.92350.9572
DEPI 1.01140.84250.85930.87310.9171.10391.1131.10371.03750.9706
SGAI 1.01011.03341.01570.96821.0251.03241.00511.06171.05811.0429
LVGI 1.05171.09981.09941.0110.99360.95940.96351.00981.01520.9991
TATA -0.0077-0.0434-0.0571-0.063-0.0723-0.0514-0.0405-0.054-0.0557-0.0564
M-score -3.34-3.54-3.53-3.55-2.26-3.07-3.23-3.14-3.23-2.77
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