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Lexmark International Inc (NYSE:LXK)
Beneish M-Score
-2.89 (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.

Lexmark International Inc has a M-score of -2.89 suggests that the company is not a manipulator.

LXK' s 10-Year Beneish M-Score Range
Min: -3.41   Max: -1.88
Current: -2.89

-3.41
-1.88

During the past 13 years, the highest Beneish M-Score of Lexmark International Inc was -1.88. The lowest was -3.41. And the median was -2.70.


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 Lexmark International Inc 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 * 0.7978+0.528 * 0.9414+0.404 * 1.3024+0.892 * 1.0179+0.115 * 0.9808
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0028+4.679 * -0.0678-0.327 * 1.031
=-2.89

* 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 $396 Mil.
Revenue was 918.1 + 891.8 + 877.7 + 1006.1 = $3,694 Mil.
Gross Profit was 357.3 + 351.2 + 341.6 + 417.8 = $1,468 Mil.
Total Current Assets was $1,729 Mil.
Total Assets was $3,542 Mil.
Property, Plant and Equipment(Net PPE) was $789 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $827 Mil.
Total Current Liabilities was $1,121 Mil.
Long-Term Debt was $700 Mil.
Net Income was 37.9 + 37.5 + 29.3 + 94 = $199 Mil.
Non Operating Income was -1 + 0.3 + -0.7 + -1.3 = $-3 Mil.
Cash Flow from Operations was 123.2 + 101.7 + 10 + 206.7 = $442 Mil.
Accounts Receivable was $488 Mil.
Revenue was 890.5 + 886.7 + 884.3 + 967.4 = $3,629 Mil.
Gross Profit was 347.9 + 341.9 + 336.4 + 331.4 = $1,358 Mil.
Total Current Assets was $1,993 Mil.
Total Assets was $3,589 Mil.
Property, Plant and Equipment(Net PPE) was $799 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,090 Mil.
Long-Term Debt was $700 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)
=(396.3 / 3693.7) / (488 / 3628.9)
=0.10729079 / 0.13447601
=0.7978

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)
=(351.2 / 3628.9) / (357.3 / 3693.7)
=0.37410786 / 0.39740639
=0.9414

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 - (1728.7 + 788.6) / 3541.9) / (1 - (1992.9 + 799) / 3589.1)
=0.28927977 / 0.22211697
=1.3024

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
=3693.7 / 3628.9
=1.0179

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))
=(259 / (259 + 799)) / (262.3 / (262.3 + 788.6))
=0.24480151 / 0.24959558
=0.9808

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)
=(827 / 3693.7) / (810.2 / 3628.9)
=0.22389474 / 0.22326325
=1.0028

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)
=((699.7 + 1120.9) / 3541.9) / ((699.6 + 1089.8) / 3589.1)
=0.5140179 / 0.4985651
=1.031

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
=(198.7 - -2.7 - 441.6) / 3541.9
=-0.0678

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.

Lexmark International Inc has a M-score of -2.89 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.

Lexmark International Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.08230.88990.91761.01730.81091.16061.04280.96071.25680.8944
GMI 0.96391.07620.97211.0250.92761.00380.9330.95521.02610.9376
AQI 0.95321.22760.61310.98231.75120.85621.60921.03531.45111.0724
SGI 1.11760.98260.97830.97370.91040.85681.08240.99360.910.9658
DEPI 1.18330.90950.83431.05830.94451.01311.05510.89860.81181.0467
SGAI 0.97451.04341.01731.09571.09090.936511.09251.16221.0419
LVGI 1.01531.05941.24530.92741.21680.94010.93220.95271.01521.031
TATA -0.0501-0.0641-0.1148-0.0866-0.0718-0.0741-0.0489-0.0194-0.0891-0.0581
M-score -2.55-2.80-3.39-2.87-2.90-2.83-2.36-2.63-2.60-2.90

Lexmark International Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.12851.21041.25681.1651.20671.00040.89450.87690.76180.7978
GMI 0.97680.99241.02611.03511.03721.00780.93760.92910.91960.9414
AQI 1.55321.51041.45111.02680.98721.06491.07241.04451.10131.3024
SGI 0.95320.92230.91010.89310.91310.93290.96570.99231.00231.0179
DEPI 0.88950.81740.81180.8340.81230.96751.04671.04481.06770.9808
SGAI 1.10071.14171.16231.19211.13211.09021.04161.01141.00651.0028
LVGI 0.991.02291.01521.03561.06091.0031.0311.0191.00941.031
TATA -0.0325-0.0768-0.0892-0.0803-0.0751-0.0674-0.059-0.0565-0.0753-0.0678
M-score -2.37-2.57-2.60-2.83-2.77-2.84-2.90-2.89-3.05-2.89
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