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Medtronic Inc (NYSE:MDT)
Beneish M-Score
-2.68 (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 -2.68 suggests that the company is not a manipulator.

MDT' s 10-Year Beneish M-Score Range
Min: -2.92   Max: -1.48
Current: -2.68

-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 -2.45.


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 * 0.986+0.528 * 1.0085+0.404 * 0.9293+0.892 * 1.0318+0.115 * 0.9564
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0079+4.679 * -0.0359-0.327 * 1.0539
=-2.68

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $3,690 Mil.
Revenue was 4273 + 4565 + 4163 + 4194 = $17,195 Mil.
Gross Profit was 3168 + 3394 + 3113 + 3104 = $12,779 Mil.
Total Current Assets was $20,770 Mil.
Total Assets was $37,554 Mil.
Property, Plant and Equipment(Net PPE) was $2,376 Mil.
Depreciation, Depletion and Amortization(DDA) was $857 Mil.
Selling, General & Admin. Expense(SGA) was $5,937 Mil.
Total Current Liabilities was $5,433 Mil.
Long-Term Debt was $10,323 Mil.
Net Income was 871 + 448 + 762 + 902 = $2,983 Mil.
Non Operating Income was 0 + 122 + -45 + -33 = $44 Mil.
Cash Flow from Operations was 310 + 1328 + 1612 + 1036 = $4,286 Mil.
Accounts Receivable was $3,627 Mil.
Revenue was 4083 + 4460 + 4027 + 4095 = $16,665 Mil.
Gross Profit was 3061 + 3326 + 3028 + 3075 = $12,490 Mil.
Total Current Assets was $18,090 Mil.
Total Assets was $34,972 Mil.
Property, Plant and Equipment(Net PPE) was $2,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $830 Mil.
Selling, General & Admin. Expense(SGA) was $5,709 Mil.
Total Current Liabilities was $4,285 Mil.
Long-Term Debt was $9,637 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)
=(3690 / 17195) / (3627 / 16665)
=0.21459727 / 0.21764176
=0.986

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)
=(3394 / 16665) / (3168 / 17195)
=0.74947495 / 0.74318116
=1.0085

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 - (20770 + 2376) / 37554) / (1 - (18090 + 2444) / 34972)
=0.38366086 / 0.41284456
=0.9293

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
=17195 / 16665
=1.0318

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))
=(830 / (830 + 2444)) / (857 / (857 + 2376))
=0.25351252 / 0.26507887
=0.9564

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)
=(5937 / 17195) / (5709 / 16665)
=0.34527479 / 0.34257426
=1.0079

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)
=((10323 + 5433) / 37554) / ((9637 + 4285) / 34972)
=0.41955584 / 0.3980899
=1.0539

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
=(2983 - 44 - 4286) / 37554
=-0.0359

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 -2.68 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

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
DSRI 1.03910.94331.03451.11720.86050.98571.16890.95470.95480.9976
GMI 0.99381.0081.01120.99650.981610.99681.00231.01121.0082
AQI 0.87870.85321.2971.1671.03050.95931.09630.69090.97720.9061
SGI 1.10651.1231.08921.09891.08021.08340.98051.04361.02511.025
DEPI 1.0320.88891.01780.98890.94960.97080.99690.96261.0180.944
SGAI 1.03691.01371.04211.03141.15370.8521.02220.99280.98851.0011
LVGI 1.07171.56150.82941.00810.94741.07780.98150.96030.9691.0665
TATA -0.00420.03090.0089-0.0567-0.0766-0.0367-0.0212-0.026-0.0423-0.0499
M-score -2.45-2.53-2.15-2.49-2.91-2.61-2.40-2.72-2.69-2.76

Medtronic Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.96650.89960.92260.94180.95481.02551.02190.9960.99760.986
GMI 0.99810.99741.00331.00811.01121.01311.01321.01121.00821.0085
AQI 0.69091.04811.02171.05660.97720.6350.61320.5820.90610.9293
SGI 1.03081.02351.02031.02321.02511.02581.02731.02881.0251.0318
DEPI 0.96260.98710.99281.041.0180.9880.96550.94230.9440.9564
SGAI 0.9520.95530.95280.93171.03431.03081.03171.0471.00111.0079
LVGI 0.96030.94921.00861.01730.9691.00311.00831.00191.06651.0539
TATA -0.0184-0.0266-0.0268-0.0328-0.0434-0.0308-0.0272-0.0364-0.0511-0.0359
M-score -2.68-2.63-2.64-2.63-2.70-2.73-2.72-2.81-2.76-2.68
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