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Medtronic, Inc. (NYSE:MDT)
Beneish M-Score
-2.80 (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.

Medtronic, Inc. has a M-score of -2.80 suggests that the company is not a manipulator.

MDT' s 10-Year Beneish M-Score Range
Min: -2.92   Max: -1.48
Current: -2.8

-2.92
-1.48

During the past 13 years, the highest Beneish M-Score of Medtronic, Inc. was -1.48. The lowest was -2.92. And the median was -2.44.


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 Medtronic, 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 * 0.996+0.528 * 1.0112+0.404 * 0.582+0.892 * 1.0288+0.115 * 0.9423
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.047+4.679 * -0.0348-0.327 * 1.0019
=-2.80

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $3,619 Mil.
Revenue was 4163 + 4194 + 4083 + 4460 = $16,900 Mil.
Gross Profit was 3113 + 3104 + 3061 + 3326 = $12,604 Mil.
Total Current Assets was $20,386 Mil.
Total Assets was $37,231 Mil.
Property, Plant and Equipment(Net PPE) was $2,408 Mil.
Depreciation, Depletion and Amortization(DDA) was $844 Mil.
Selling, General & Admin. Expense(SGA) was $5,783 Mil.
Total Current Liabilities was $5,632 Mil.
Long-Term Debt was $9,601 Mil.
Net Income was 762 + 902 + 953 + 969 = $3,586 Mil.
Non Operating Income was -45 + -33 + 0 + 119 = $41 Mil.
Cash Flow from Operations was 1612 + 1036 + 983 + 1211 = $4,842 Mil.
Accounts Receivable was $3,532 Mil.
Revenue was 4027 + 4095 + 4008 + 4297 = $16,427 Mil.
Gross Profit was 3028 + 3075 + 3035 + 3250 = $12,388 Mil.
Total Current Assets was $9,161 Mil.
Total Assets was $34,949 Mil.
Property, Plant and Equipment(Net PPE) was $2,502 Mil.
Depreciation, Depletion and Amortization(DDA) was $810 Mil.
Selling, General & Admin. Expense(SGA) was $5,369 Mil.
Total Current Liabilities was $6,958 Mil.
Long-Term Debt was $7,314 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)
=(3619 / 16900) / (3532 / 16427)
=0.21414201 / 0.21501187
=0.996

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)
=(3104 / 16427) / (3113 / 16900)
=0.75412431 / 0.74579882
=1.0112

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 - (20386 + 2408) / 37231) / (1 - (9161 + 2502) / 34949)
=0.38776826 / 0.66628516
=0.582

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
=16900 / 16427
=1.0288

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))
=(810 / (810 + 2502)) / (844 / (844 + 2408))
=0.24456522 / 0.2595326
=0.9423

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)
=(5783 / 16900) / (5369 / 16427)
=0.34218935 / 0.32683996
=1.047

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)
=((9601 + 5632) / 37231) / ((7314 + 6958) / 34949)
=0.40914829 / 0.40836648
=1.0019

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
=(3586 - 41 - 4842) / 37231
=-0.0348

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.

Medtronic, Inc. has a M-score of -2.80 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.

Medtronic, Inc. Annual Data

Apr04Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13
DSRI 0.9551.03910.94331.03451.11720.86050.98571.16890.95470.9548
GMI 1.00170.99381.0081.01120.99650.981610.99681.00231.0112
AQI 1.01640.87870.85321.2971.1671.03050.95931.09630.69090.9788
SGI 1.18551.10651.1231.08921.09891.08021.08340.98051.04361.0251
DEPI 0.99611.0320.88891.01780.98890.94960.97080.99690.96261.018
SGAI 0.99631.03691.01371.04211.03141.15370.8521.02220.99280.9885
LVGI 0.96151.07171.56150.82941.00810.94741.07780.98150.96030.9665
TATA -0.0383-0.00420.03090.0089-0.0567-0.0766-0.0367-0.0212-0.026-0.0406
M-score -2.51-2.45-2.53-2.15-2.49-2.91-2.61-2.40-2.72-2.68

Medtronic, Inc. Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.09241.03420.96650.89960.92260.94180.95481.02551.02190.996
GMI 1.00080.99760.99810.99741.00331.00811.01121.01311.01321.0112
AQI 1.09971.06580.69091.04811.02171.05660.97880.6350.61320.582
SGI 1.01721.02071.03081.02351.02031.02321.02511.02581.02731.0288
DEPI 1.0010.94840.96260.98710.99281.041.0180.9880.96550.9423
SGAI 1.13171.16860.9520.95530.95280.93171.03431.03081.03171.047
LVGI 0.91690.910.96030.94921.00861.01730.96651.00311.00831.0019
TATA -0.0215-0.0178-0.0184-0.0266-0.0268-0.0328-0.0418-0.0291-0.0256-0.0348
M-score -2.43-2.49-2.68-2.63-2.64-2.63-2.69-2.72-2.72-2.80
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