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Lexmark International, Inc. (NYSE:LXK)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

LXK' s 10-Year Beneish M-Score Range
Min: -3.39   Max: -1.93
Current: -2.9

-3.39
-1.93

During the past 13 years, the highest Beneish M-Score of Lexmark International, Inc. was -1.93. The lowest was -3.39. And the median was -2.80.


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 * 0.8945+0.528 * 0.9376+0.404 * 1.0724+0.892 * 0.9657+0.115 * 1.0467
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0416+4.679 * -0.0581-0.327 * 1.031
=-2.90

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $452 Mil.
Revenue was 1006.1 + 890.5 + 886.7 + 884.3 = $3,668 Mil.
Gross Profit was 423 + 346.2 + 340.2 + 334.6 = $1,444 Mil.
Total Current Assets was $1,972 Mil.
Total Assets was $3,620 Mil.
Property, Plant and Equipment(Net PPE) was $812 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,147 Mil.
Long-Term Debt was $700 Mil.
Net Income was 109.6 + 28.5 + 88.9 + 34.8 = $262 Mil.
Non Operating Income was -1.3 + -0.7 + -1.5 + -4.3 = $-8 Mil.
Cash Flow from Operations was 210.4 + 142.8 + 88.9 + 37.9 = $480 Mil.
Accounts Receivable was $524 Mil.
Revenue was 967.4 + 919.2 + 918.6 + 992.5 = $3,798 Mil.
Gross Profit was 331.4 + 328.4 + 360.7 + 381.4 = $1,402 Mil.
Total Current Assets was $1,921 Mil.
Total Assets was $3,525 Mil.
Property, Plant and Equipment(Net PPE) was $845 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $805 Mil.
Total Current Liabilities was $1,445 Mil.
Long-Term Debt was $300 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)
=(452.3 / 3667.6) / (523.6 / 3797.7)
=0.12332315 / 0.13787292
=0.8945

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)
=(346.2 / 3797.7) / (423 / 3667.6)
=0.36914448 / 0.39371796
=0.9376

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 - (1971.7 + 812.4) / 3619.5) / (1 - (1921.3 + 845.3) / 3525.3)
=0.23080536 / 0.21521573
=1.0724

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
=3667.6 / 3797.7
=0.9657

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))
=(275.8 / (275.8 + 845.3)) / (249.6 / (249.6 + 812.4))
=0.24600838 / 0.23502825
=1.0467

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)
=(810.1 / 3667.6) / (805.3 / 3797.7)
=0.22088014 / 0.2120494
=1.0416

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)
=((699.6 + 1146.9) / 3619.5) / ((299.6 + 1444.7) / 3525.3)
=0.51015334 / 0.49479477
=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
=(261.8 - -7.8 - 480) / 3619.5
=-0.0581

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 -2.90 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.9940.96060.99791.12851.21041.25681.1651.20671.00040.8945
GMI 0.96720.95520.95520.97680.99241.02611.03651.03991.01170.9376
AQI 0.96191.03531.53381.55321.51041.45111.02680.98721.06491.0724
SGI 1.01170.99370.98570.95320.92230.91010.89310.91310.93290.9657
DEPI 0.94250.89860.87970.88950.81740.81180.8340.81230.96751.0467
SGAI 1.10211.09281.06421.10071.14171.16231.19681.14121.10341.0416
LVGI 0.93170.95270.95280.991.02291.01521.03561.06091.0031.031
TATA -0.0117-0.0194-0.0273-0.0325-0.0768-0.0892-0.0815-0.0765-0.0699-0.0581
M-score -2.56-2.63-2.44-2.37-2.57-2.60-2.84-2.78-2.86-2.90
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