Switch to:
GuruFocus has detected 3 Warning Signs with JPMorgan Chase & Co $JPM.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
JPMorgan Chase & Co (NYSE:JPM)
Beneish M-Score
-2.07 (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.

JPMorgan Chase & Co has a M-score of -2.07 signals that the company is a manipulator.

JPM' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: 2.1
Current: -2.07

-2.93
2.1

During the past 13 years, the highest Beneish M-Score of JPMorgan Chase & Co was 2.10. The lowest was -2.93. And the median was -2.42.


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 JPMorgan Chase & Co 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 * 1.0979+0.528 * 1+0.404 * 1.0004+0.892 * 1.0227+0.115 * 0.9161
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0049+4.679 * 0.0018-0.327 * 0.0692
=-2.07

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $52,330 Mil.
Revenue was 23376 + 24673 + 24380 + 23239 = $95,668 Mil.
Gross Profit was 23376 + 24673 + 24380 + 23239 = $95,668 Mil.
Total Current Assets was $0 Mil.
Total Assets was $2,490,972 Mil.
Property, Plant and Equipment(Net PPE) was $14,131 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,478 Mil.
Selling, General & Admin. Expense(SGA) was $39,722 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $22,705 Mil.
Net Income was 6727 + 6286 + 6200 + 5520 = $24,733 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 38911 + 4192 + -1524 + -21383 = $20,196 Mil.
Accounts Receivable was $46,605 Mil.
Revenue was 22885 + 22780 + 23812 + 24066 = $93,543 Mil.
Gross Profit was 22885 + 22780 + 23812 + 24066 = $93,543 Mil.
Total Current Assets was $0 Mil.
Total Assets was $2,351,698 Mil.
Property, Plant and Equipment(Net PPE) was $14,362 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,940 Mil.
Selling, General & Admin. Expense(SGA) was $38,651 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $309,756 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)
=(52330 / 95668) / (46605 / 93543)
=0.54699586 / 0.49822007
=1.0979

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)
=(93543 / 93543) / (95668 / 95668)
=1 / 1
=1

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 - (0 + 14131) / 2490972) / (1 - (0 + 14362) / 2351698)
=0.99432711 / 0.99389292
=1.0004

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
=95668 / 93543
=1.0227

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))
=(4940 / (4940 + 14362)) / (5478 / (5478 + 14131))
=0.25593203 / 0.27936152
=0.9161

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)
=(39722 / 95668) / (38651 / 93543)
=0.41520676 / 0.41318966
=1.0049

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)
=((22705 + 0) / 2490972) / ((309756 + 0) / 2351698)
=0.00911492 / 0.13171589
=0.0692

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
=(24733 - 0 - 20196) / 2490972
=0.0018

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.

JPMorgan Chase & Co has a M-score of -2.07 signals that the company is likely to 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.

JPMorgan Chase & Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

JPMorgan Chase & Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.16641.10290.94930.89460.7810.66970.84620.94561.08721.0979
GMI 1111111111
AQI 11.00031.00020.99990.99990.99980.99991.00041.00051.0004
SGI 0.97680.97511.00851.00980.98230.9930.97310.98571.02151.0227
DEPI 1.11471.09811.1271.08120.97140.93480.91590.9040.91250.9161
SGAI 1.02361.01961.00641.01581.01821.01071.01971.01031.00021.0049
LVGI 0.99740.97430.97111.06981.11331.10381.06610.989610.0692
TATA 0.0085-0.0058-0.0056-0.0146-0.0257-0.0208-0.00540.00230.01030.0018
M-score -2.30-2.42-2.52-2.65-2.86-2.93-2.71-2.54-2.34-2.07
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK