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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 * 0.9546+0.528 * 1.0055+0.404 * 0.9588+0.892 * 1.036+0.115 * 0.9668
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0301+4.679 * -0.0343-0.327 * 1.0353
=-2.68

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $3,750 Mil.
Revenue was 4366 + 4273 + 4565 + 4163 = $17,367 Mil.
Gross Profit was 3224 + 3168 + 3394 + 3113 = $12,899 Mil.
Total Current Assets was $21,597 Mil.
Total Assets was $38,780 Mil.
Property, Plant and Equipment(Net PPE) was $2,361 Mil.
Depreciation, Depletion and Amortization(DDA) was $852 Mil.
Selling, General & Admin. Expense(SGA) was $6,006 Mil.
Total Current Liabilities was $6,952 Mil.
Long-Term Debt was $9,708 Mil.
Net Income was 828 + 871 + 448 + 762 = $2,909 Mil.
Non Operating Income was 0 + 0 + 122 + -45 = $77 Mil.
Cash Flow from Operations was 913 + 310 + 1328 + 1612 = $4,163 Mil.
Accounts Receivable was $3,792 Mil.
Revenue was 4194 + 4083 + 4460 + 4027 = $16,764 Mil.
Gross Profit was 3104 + 3061 + 3326 + 3028 = $12,519 Mil.
Total Current Assets was $19,483 Mil.
Total Assets was $36,468 Mil.
Property, Plant and Equipment(Net PPE) was $2,448 Mil.
Depreciation, Depletion and Amortization(DDA) was $844 Mil.
Selling, General & Admin. Expense(SGA) was $5,628 Mil.
Total Current Liabilities was $5,496 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)
=(3750 / 17367) / (3792 / 16764)
=0.21592676 / 0.226199
=0.9546

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)
=(3168 / 16764) / (3224 / 17367)
=0.74677881 / 0.74273047
=1.0055

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 - (21597 + 2361) / 38780) / (1 - (19483 + 2448) / 36468)
=0.38220732 / 0.39862345
=0.9588

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
=17367 / 16764
=1.036

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))
=(844 / (844 + 2448)) / (852 / (852 + 2361))
=0.2563791 / 0.26517274
=0.9668

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)
=(6006 / 17367) / (5628 / 16764)
=0.3458283 / 0.3357194
=1.0301

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)
=((9708 + 6952) / 38780) / ((9637 + 5496) / 36468)
=0.42960289 / 0.41496655
=1.0353

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
=(2909 - 77 - 4163) / 38780
=-0.0343

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 1.03910.94331.03451.09290.87960.98571.13770.98090.95480.9976
GMI 0.99381.0081.01120.99650.981611.0060.99311.01121.0082
AQI 0.87870.85321.2971.1671.03050.95931.09631.03210.65530.9046
SGI 1.10651.1231.08921.09891.08021.08341.00731.01581.02511.025
DEPI 1.0320.88891.01780.98890.94960.97080.99690.96261.0180.944
SGAI 1.03691.01371.04211.03141.15370.91090.94881.00050.98851.0011
LVGI 1.07171.56150.82941.00810.94741.07780.98150.94760.97941.0693
TATA -0.00420.03090.0089-0.0567-0.0766-0.0367-0.0212-0.0258-0.0406-0.0499
M-score -2.45-2.53-2.15-2.52-2.89-2.62-2.39-2.58-2.81-2.76

Medtronic Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.91240.94820.96180.96731.03231.02190.9960.99760.9860.9546
GMI 0.99240.99391.00081.00651.01081.01321.01121.00821.00851.0055
AQI 1.04811.02171.05660.65530.6350.61320.5820.90460.92930.9588
SGI 1.00910.99281.0021.01181.0191.02731.02881.0251.03181.036
DEPI 0.98711.0171.09631.0180.9880.95370.91660.9440.95640.9668
SGAI 1.01151.08071.11970.9740.96960.96870.96551.01941.02621.0301
LVGI 0.94921.00861.01730.97941.00311.00831.00191.06931.05391.0353
TATA -0.0238-0.0254-0.0338-0.0377-0.0277-0.0244-0.031-0.0511-0.0359-0.0343
M-score -2.64-2.66-2.66-2.80-2.70-2.70-2.77-2.77-2.68-2.68
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