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Lexmark International Inc (NYSE:LXK)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

LXK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.41   Max: -1.88
Current: -2.38

-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 * 1.1419+0.528 * 1.0448+0.404 * 1.8406+0.892 * 0.9761+0.115 * 0.8962
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2437+4.679 * -0.0613-0.327 * 1.0943
=-2.38

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $442 Mil.
Revenue was 851.1 + 879.3 + 852 + 1022.9 = $3,605 Mil.
Gross Profit was 319.6 + 362.1 + 329.9 + 359.7 = $1,371 Mil.
Total Current Assets was $1,120 Mil.
Total Assets was $3,983 Mil.
Property, Plant and Equipment(Net PPE) was $742 Mil.
Depreciation, Depletion and Amortization(DDA) was $286 Mil.
Selling, General & Admin. Expense(SGA) was $1,004 Mil.
Total Current Liabilities was $1,144 Mil.
Long-Term Debt was $1,097 Mil.
Net Income was -15.2 + -36.3 + 19.7 + -23.4 = $-55 Mil.
Non Operating Income was -3.4 + 0.6 + 0.8 + -2 = $-4 Mil.
Cash Flow from Operations was 21.9 + -6.7 + -10.5 + 188.1 = $193 Mil.
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.



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)
=(441.7 / 3605.3) / (396.3 / 3693.7)
=0.12251408 / 0.10729079
=1.1419

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)
=(362.1 / 3693.7) / (319.6 / 3605.3)
=0.39740639 / 0.3803567
=1.0448

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 - (1120.3 + 742) / 3983.1) / (1 - (1728.7 + 788.6) / 3541.9)
=0.5324496 / 0.28927977
=1.8406

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
=3605.3 / 3693.7
=0.9761

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))
=(262.3 / (262.3 + 788.6)) / (286.4 / (286.4 + 742))
=0.24959558 / 0.27849086
=0.8962

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)
=(1003.9 / 3605.3) / (827 / 3693.7)
=0.27845117 / 0.22389474
=1.2437

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)
=((1096.8 + 1143.6) / 3983.1) / ((699.7 + 1120.9) / 3541.9)
=0.56247646 / 0.5140179
=1.0943

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
=(-55.2 - -4 - 192.8) / 3983.1
=-0.0613

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 -2.38 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.88990.91761.01730.81091.16061.04280.96071.25680.89440.9213
GMI 1.07620.97211.0250.92761.00380.9330.95521.02610.93761.0362
AQI 1.22760.61310.98231.75120.85621.60921.03531.45111.07141.2089
SGI 0.98260.97830.97370.91040.85681.08240.99360.910.96581.0117
DEPI 0.90950.83431.05830.94451.01311.05510.89860.81181.04670.9473
SGAI 1.04341.01731.09571.09090.936511.09251.16221.04191.0837
LVGI 1.05941.24530.92741.21680.94010.93220.95271.01521.03191.0302
TATA -0.0641-0.1148-0.0866-0.0718-0.0741-0.0489-0.0194-0.0891-0.0582-0.0935
M-score -2.80-3.39-2.87-2.90-2.83-2.36-2.63-2.60-2.90-2.91

Lexmark International Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.20671.00040.89450.87690.76180.79780.92130.9131.14811.1419
GMI 1.03721.00780.93760.92910.91960.94141.03621.04331.03691.0448
AQI 0.98721.06491.07141.04451.10131.30241.20891.23232.28921.8406
SGI 0.91310.93290.96570.99231.00231.01791.01171.00651.00170.9761
DEPI 0.81230.96751.04671.04481.06770.98080.94730.95160.93490.8962
SGAI 1.13211.09021.04161.01141.00651.00281.08391.08351.1621.2437
LVGI 1.06091.0031.03191.0191.00941.0311.03021.03481.12151.0943
TATA -0.0751-0.0674-0.059-0.0569-0.0755-0.0689-0.0942-0.0957-0.0737-0.0613
M-score -2.77-2.84-2.90-2.89-3.05-2.89-2.91-2.92-2.22-2.38
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