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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-3.12 (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.

Microsoft Corp has a M-score of -3.12 suggests that the company is not a manipulator.

MSFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.19   Max: -2.06
Current: -3.12

-3.19
-2.06

During the past 13 years, the highest Beneish M-Score of Microsoft Corp was -2.06. The lowest was -3.19. And the median was -2.69.


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 Microsoft Corp 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 * 1.0751+0.528 * 1.0335+0.404 * 0.8101+0.892 * 0.9167+0.115 * 1.1195
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.992+4.679 * -0.1122-0.327 * 1.2109
=-3.12

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $12,247 Mil.
Revenue was 20531 + 23796 + 20379 + 22180 = $86,886 Mil.
Gross Profit was 12809 + 13924 + 13172 + 14712 = $54,617 Mil.
Total Current Assets was $128,421 Mil.
Total Assets was $181,869 Mil.
Property, Plant and Equipment(Net PPE) was $16,831 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,205 Mil.
Selling, General & Admin. Expense(SGA) was $19,194 Mil.
Total Current Liabilities was $44,354 Mil.
Long-Term Debt was $40,896 Mil.
Net Income was 3756 + 4998 + 4620 + -3195 = $10,179 Mil.
Non Operating Income was -247 + -62 + -230 + 297 = $-242 Mil.
Cash Flow from Operations was 10367 + 5598 + 8594 + 6261 = $30,820 Mil.
Accounts Receivable was $12,427 Mil.
Revenue was 21729 + 26470 + 23201 + 23382 = $94,782 Mil.
Gross Profit was 14568 + 16334 + 14928 + 15749 = $61,579 Mil.
Total Current Assets was $118,398 Mil.
Total Assets was $176,683 Mil.
Property, Plant and Equipment(Net PPE) was $14,375 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,206 Mil.
Selling, General & Admin. Expense(SGA) was $21,108 Mil.
Total Current Liabilities was $40,748 Mil.
Long-Term Debt was $27,644 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)
=(12247 / 86886) / (12427 / 94782)
=0.14095481 / 0.13111139
=1.0751

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)
=(13924 / 94782) / (12809 / 86886)
=0.64969087 / 0.6286053
=1.0335

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 - (128421 + 16831) / 181869) / (1 - (118398 + 14375) / 176683)
=0.20133723 / 0.24852419
=0.8101

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
=86886 / 94782
=0.9167

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))
=(6206 / (6206 + 14375)) / (6205 / (6205 + 16831))
=0.30154026 / 0.269361
=1.1195

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)
=(19194 / 86886) / (21108 / 94782)
=0.22091016 / 0.22270051
=0.992

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)
=((40896 + 44354) / 181869) / ((27644 + 40748) / 176683)
=0.46874399 / 0.38708874
=1.2109

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
=(10179 - -242 - 30820) / 181869
=-0.1122

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.

Microsoft Corp has a M-score of -3.12 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.

Microsoft Corp Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 1.16581.05421.01410.85161.08751.02880.99891.04941.00210.8502
GMI 1.02051.0460.97871.02030.9881.03131.01981.03021.07261.0663
AQI 0.90461.17141.08440.84490.97890.890.97660.94461.20380.7973
SGI 1.11291.15451.18190.96721.06931.11941.0541.0561.11541.0777
DEPI 1.16750.91991.00380.97650.9781.0250.95850.96670.95510.9933
SGAI 0.94980.94331.03970.96240.95560.93910.96251.04970.90560.914
LVGI 1.3531.16611.09180.96250.91351.0370.9560.98121.09471.1464
TATA -0.0517-0.0631-0.06-0.0504-0.0643-0.0382-0.1215-0.0492-0.0576-0.0979
M-score -2.58-2.55-2.60-2.92-2.62-2.55-2.98-2.63-2.54-3.09

Microsoft Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.9761.02651.00211.02830.90390.80960.85020.89530.95091.0751
GMI 1.05771.07841.07261.0961.08381.07411.06371.03421.02711.0335
AQI 0.96750.96751.20381.14891.12261.09780.79730.80740.78950.8101
SGI 1.1441.09651.11541.13851.12011.13721.07770.99180.94250.9167
DEPI 1.01941.0180.95510.90050.88370.91020.99331.05571.10261.1195
SGAI 0.94290.9060.90530.90330.91460.93870.92050.94980.98180.992
LVGI 1.03991.06851.09471.12151.05981.10721.14641.19961.23171.2109
TATA -0.0349-0.0396-0.0589-0.0647-0.0664-0.0666-0.0943-0.0958-0.1031-0.1122
M-score -2.52-2.53-2.55-2.56-2.70-2.80-3.07-3.14-3.19-3.12
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