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GuruFocus has detected 6 Warning Signs with Medtronic PLC $MDT.
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Medtronic PLC (NYSE:MDT)
Beneish M-Score
-2.48 (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 PLC has a M-score of -2.46 suggests that the company is not a manipulator.

MDT' s Beneish M-Score Range Over the Past 10 Years
Min: -2.96   Max: -0.27
Current: -2.48

-2.96
-0.27

During the past 13 years, the highest Beneish M-Score of Medtronic PLC was -0.27. The lowest was -2.96. And the median was -2.48.


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 PLC 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 * 1.004+0.528 * 0.9682+0.404 * 1.0582+0.892 * 1.1178+0.115 * 0.8819
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9809+4.679 * -0.0193-0.327 * 0.9847
=-2.46

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $5,661 Mil.
Revenue was 7345 + 7166 + 7567 + 6934 = $29,012 Mil.
Gross Profit was 5019 + 4905 + 5204 + 4793 = $19,921 Mil.
Total Current Assets was $22,526 Mil.
Total Assets was $98,406 Mil.
Property, Plant and Equipment(Net PPE) was $4,891 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,892 Mil.
Selling, General & Admin. Expense(SGA) was $9,521 Mil.
Total Current Liabilities was $9,601 Mil.
Long-Term Debt was $29,010 Mil.
Net Income was 1115 + 929 + 1103 + 1095 = $4,242 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1472 + 1550 + 1326 + 1797 = $6,145 Mil.
Accounts Receivable was $5,044 Mil.
Revenue was 7058 + 7274 + 7304 + 4318 = $25,954 Mil.
Gross Profit was 4876 + 4818 + 4370 + 3190 = $17,254 Mil.
Total Current Assets was $28,723 Mil.
Total Assets was $104,945 Mil.
Property, Plant and Equipment(Net PPE) was $4,678 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,280 Mil.
Selling, General & Admin. Expense(SGA) was $8,683 Mil.
Total Current Liabilities was $8,126 Mil.
Long-Term Debt was $33,690 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)
=(5661 / 29012) / (5044 / 25954)
=0.19512615 / 0.19434384
=1.004

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)
=(17254 / 25954) / (19921 / 29012)
=0.66479155 / 0.6866469
=0.9682

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 - (22526 + 4891) / 98406) / (1 - (28723 + 4678) / 104945)
=0.72138894 / 0.68172852
=1.0582

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
=29012 / 25954
=1.1178

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))
=(2280 / (2280 + 4678)) / (2892 / (2892 + 4891))
=0.32768037 / 0.37157908
=0.8819

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)
=(9521 / 29012) / (8683 / 25954)
=0.32817455 / 0.33455344
=0.9809

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)
=((29010 + 9601) / 98406) / ((33690 + 8126) / 104945)
=0.39236429 / 0.39845633
=0.9847

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
=(4242 - 0 - 6145) / 98406
=-0.0193

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 PLC has a M-score of -2.46 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 local exchange's currency.

Medtronic PLC Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
DSRI 1.03451.09290.87960.98571.16890.95470.95480.99761.12580.7646
GMI 1.01120.99650.981610.99681.00231.01121.00821.08221.0083
AQI 1.2971.1671.03050.95931.09630.69090.97880.90461.76431.0722
SGI 1.08921.09891.08021.08340.98051.04361.02511.0251.19151.4231
DEPI 1.01780.98890.94960.97080.99690.96261.0180.9441.20550.5908
SGAI 1.04211.03141.15370.8521.02220.99280.98851.00110.9910.9638
LVGI 0.82941.00810.94741.07780.98150.96030.96651.06930.96170.9319
TATA 0.0089-0.0518-0.0844-0.0455-0.0303-0.026-0.0423-0.0499-0.0209-0.0168
M-score -2.15-2.49-2.93-2.65-2.44-2.72-2.68-2.76-1.90-2.38

Medtronic PLC Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.95460.95091.12580.96370.90.83590.76460.90171.0041.0911
GMI 1.00551.00711.08221.10811.11721.1221.00830.97410.96820.9621
AQI 0.95880.68851.76431.7641.78372.57111.07221.05331.05821.0482
SGI 1.0361.03681.19151.35281.49441.63051.42311.23481.11781.0277
DEPI 0.96680.97481.20550.95620.80920.70880.59080.74450.88191.0148
SGAI 1.01181.00720.9910.9770.96740.96610.96380.9750.98090.9811
LVGI 1.03531.42730.96170.94240.92750.69730.93190.97520.98470.9713
TATA -0.0323-0.0216-0.0209-0.0266-0.033-0.0328-0.0168-0.0234-0.0193-0.0253
M-score -2.67-2.86-1.90-1.94-1.90-1.45-2.38-2.48-2.46-2.48
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