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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-2.92 (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 -2.92 suggests that the company is not a manipulator.

MSFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: -2.11
Current: -2.92

-3.09
-2.11

During the past 13 years, the highest Beneish M-Score of Microsoft Corp was -2.11. The lowest was -3.09. And the median was -2.64.


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 * 1.1194+0.528 * 1.0506+0.404 * 0.8699+0.892 * 0.9117+0.115 * 1.0861
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0394+4.679 * -0.0839-0.327 * 1.1646
=-2.92

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $18,277 Mil.
Revenue was 20614 + 20531 + 23796 + 20379 = $85,320 Mil.
Gross Profit was 12635 + 12809 + 13924 + 13172 = $52,540 Mil.
Total Current Assets was $139,660 Mil.
Total Assets was $193,694 Mil.
Property, Plant and Equipment(Net PPE) was $18,356 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,622 Mil.
Selling, General & Admin. Expense(SGA) was $19,260 Mil.
Total Current Liabilities was $59,357 Mil.
Long-Term Debt was $40,783 Mil.
Net Income was 3122 + 3756 + 4998 + 4620 = $16,496 Mil.
Non Operating Income was 267 + -247 + -62 + -230 = $-272 Mil.
Cash Flow from Operations was 8464 + 10367 + 5598 + 8594 = $33,023 Mil.
Accounts Receivable was $17,908 Mil.
Revenue was 22180 + 21729 + 26470 + 23201 = $93,580 Mil.
Gross Profit was 14712 + 14568 + 16334 + 14928 = $60,542 Mil.
Total Current Assets was $122,797 Mil.
Total Assets was $174,472 Mil.
Property, Plant and Equipment(Net PPE) was $14,731 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,957 Mil.
Selling, General & Admin. Expense(SGA) was $20,324 Mil.
Total Current Liabilities was $49,647 Mil.
Long-Term Debt was $27,808 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)
=(18277 / 85320) / (17908 / 93580)
=0.21421707 / 0.19136568
=1.1194

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)
=(60542 / 93580) / (52540 / 85320)
=0.64695448 / 0.61579934
=1.0506

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 - (139660 + 18356) / 193694) / (1 - (122797 + 14731) / 174472)
=0.18419776 / 0.21174744
=0.8699

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
=85320 / 93580
=0.9117

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))
=(5957 / (5957 + 14731)) / (6622 / (6622 + 18356))
=0.2879447 / 0.2651133
=1.0861

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)
=(19260 / 85320) / (20324 / 93580)
=0.2257384 / 0.21718316
=1.0394

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)
=((40783 + 59357) / 193694) / ((27808 + 49647) / 174472)
=0.51700104 / 0.44393943
=1.1646

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
=(16496 - -272 - 33023) / 193694
=-0.0839

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 -2.92 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

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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.02651.00211.02830.90390.80960.85020.89530.95091.07511.1194
GMI 1.07841.07261.0961.08381.07411.06371.03421.02711.03351.0506
AQI 0.96751.20381.14891.12261.09780.80890.80740.78950.81010.8699
SGI 1.09651.11541.13851.12011.13721.07770.99180.94250.91670.9117
DEPI 1.0180.95510.90050.88370.91020.99331.05571.10261.11951.0861
SGAI 0.9060.90530.90330.91460.93870.92050.94980.98180.9921.0394
LVGI 1.06851.09471.12151.05981.10721.15481.19961.23171.21091.1646
TATA -0.0396-0.0605-0.0663-0.068-0.0682-0.0987-0.0992-0.1064-0.1154-0.0839
M-score -2.53-2.56-2.56-2.70-2.81-3.09-3.16-3.21-3.14-2.92
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