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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-3.06 (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 -3.06 suggests that the company is not a manipulator.

MSFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.21   Max: -2.06
Current: -3.06

-3.21
-2.06

During the past 13 years, the highest Beneish M-Score of Microsoft Corp was -2.06. The lowest was -3.21. And the median was -2.70.


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 * 1.0336+0.528 * 1.0642+0.404 * 0.7955+0.892 * 0.9409+0.115 * 1.0693
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0232+4.679 * -0.0923-0.327 * 1.2534
=-3.06

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $11,129 Mil.
Revenue was 20453 + 20614 + 20531 + 23796 = $85,394 Mil.
Gross Profit was 12609 + 12635 + 12809 + 13924 = $51,977 Mil.
Total Current Assets was $157,909 Mil.
Total Assets was $212,524 Mil.
Property, Plant and Equipment(Net PPE) was $19,224 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,977 Mil.
Selling, General & Admin. Expense(SGA) was $19,121 Mil.
Total Current Liabilities was $58,810 Mil.
Long-Term Debt was $60,154 Mil.
Net Income was 4690 + 3122 + 3756 + 4998 = $16,566 Mil.
Non Operating Income was 244 + 267 + -247 + -62 = $202 Mil.
Cash Flow from Operations was 11549 + 8464 + 10367 + 5598 = $35,978 Mil.
Accounts Receivable was $11,444 Mil.
Revenue was 20379 + 22180 + 21729 + 26470 = $90,758 Mil.
Gross Profit was 13172 + 14712 + 14568 + 16334 = $58,786 Mil.
Total Current Assets was $121,656 Mil.
Total Assets was $172,896 Mil.
Property, Plant and Equipment(Net PPE) was $15,046 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,990 Mil.
Selling, General & Admin. Expense(SGA) was $19,862 Mil.
Total Current Liabilities was $49,399 Mil.
Long-Term Debt was $27,819 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)
=(11129 / 85394) / (11444 / 90758)
=0.13032532 / 0.12609357
=1.0336

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)
=(58786 / 90758) / (51977 / 85394)
=0.64772251 / 0.60867274
=1.0642

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 - (157909 + 19224) / 212524) / (1 - (121656 + 15046) / 172896)
=0.16652707 / 0.20933972
=0.7955

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
=85394 / 90758
=0.9409

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))
=(5990 / (5990 + 15046)) / (6977 / (6977 + 19224))
=0.28474995 / 0.26628755
=1.0693

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)
=(19121 / 85394) / (19862 / 90758)
=0.22391503 / 0.21884572
=1.0232

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)
=((60154 + 58810) / 212524) / ((27819 + 49399) / 172896)
=0.55976737 / 0.44661531
=1.2534

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
=(16566 - 202 - 35978) / 212524
=-0.0923

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 -3.06 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.

Microsoft Corp Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.05421.01410.85161.08751.02880.99891.04941.00210.85021.1194
GMI 1.0460.97871.02030.9881.03131.01981.03261.07261.06371.0506
AQI 1.17141.08440.84490.97890.890.97660.94461.20380.80890.8699
SGI 1.15451.18190.96721.06931.11941.0541.0561.11541.07770.9117
DEPI 0.91991.00380.97650.9781.0250.95850.96670.95510.99331.0861
SGAI 0.94881.04620.95080.95560.93910.96251.04270.90530.92051.0394
LVGI 1.16611.09180.96250.91351.0370.9560.98121.09471.15481.1646
TATA -0.0854-0.063-0.0413-0.0643-0.0382-0.1215-0.0492-0.0592-0.1022-0.0849
M-score -2.65-2.61-2.87-2.62-2.55-2.98-2.63-2.55-3.11-2.92

Microsoft Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.00211.02830.90390.80960.85020.89530.95091.07511.11941.0336
GMI 1.07261.0961.08381.07411.06371.03421.02711.03351.05061.0642
AQI 1.20381.14891.12261.09780.80890.80740.78950.81010.86990.7955
SGI 1.11541.13851.12011.13721.07770.99180.94250.91670.91170.9409
DEPI 0.95510.90050.88370.91020.99331.05571.10261.11951.08611.0693
SGAI 0.90530.90330.91460.93870.92050.94980.98180.9921.03941.0232
LVGI 1.09471.12151.05981.10721.15481.19961.23171.21091.16461.2534
TATA -0.0605-0.0663-0.068-0.0682-0.0987-0.0992-0.1064-0.1154-0.0839-0.0923
M-score -2.56-2.56-2.70-2.81-3.09-3.16-3.21-3.14-2.92-3.06
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