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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-3.21 (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 -3.21 suggests that the company is not a manipulator.

MSFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -2.11
Current: -3.21

-3.27
-2.11

During the past 13 years, the highest Beneish M-Score of Microsoft Corp was -2.11. The lowest was -3.27. And the median was -2.87.


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 * 0.9509+0.528 * 1.0271+0.404 * 0.7895+0.892 * 0.9425+0.115 * 1.1026
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9818+4.679 * -0.1066-0.327 * 1.2317
=-3.21

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $14,507 Mil.
Revenue was 23796 + 20379 + 22180 + 21729 = $88,084 Mil.
Gross Profit was 13924 + 13172 + 14712 + 14568 = $56,376 Mil.
Total Current Assets was $127,812 Mil.
Total Assets was $180,098 Mil.
Property, Plant and Equipment(Net PPE) was $15,789 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,013 Mil.
Selling, General & Admin. Expense(SGA) was $19,448 Mil.
Total Current Liabilities was $42,643 Mil.
Long-Term Debt was $40,679 Mil.
Net Income was 4998 + 4620 + -3195 + 4985 = $11,408 Mil.
Non Operating Income was -62 + -230 + 346 + -26 = $28 Mil.
Cash Flow from Operations was 5598 + 8594 + 6816 + 9570 = $30,578 Mil.
Accounts Receivable was $16,186 Mil.
Revenue was 26470 + 23201 + 23382 + 20403 = $93,456 Mil.
Gross Profit was 16334 + 14928 + 15749 + 14425 = $61,436 Mil.
Total Current Assets was $116,362 Mil.
Total Assets was $174,848 Mil.
Property, Plant and Equipment(Net PPE) was $13,607 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,946 Mil.
Selling, General & Admin. Expense(SGA) was $21,016 Mil.
Total Current Liabilities was $47,415 Mil.
Long-Term Debt was $18,260 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)
=(14507 / 88084) / (16186 / 93456)
=0.16469506 / 0.1731938
=0.9509

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)
=(13172 / 93456) / (13924 / 88084)
=0.65737887 / 0.64002543
=1.0271

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 - (127812 + 15789) / 180098) / (1 - (116362 + 13607) / 174848)
=0.20265078 / 0.25667437
=0.7895

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
=88084 / 93456
=0.9425

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))
=(5946 / (5946 + 13607)) / (6013 / (6013 + 15789))
=0.30409656 / 0.27580039
=1.1026

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)
=(19448 / 88084) / (21016 / 93456)
=0.22078925 / 0.22487588
=0.9818

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)
=((40679 + 42643) / 180098) / ((18260 + 47415) / 174848)
=0.46264811 / 0.37561196
=1.2317

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
=(11408 - 28 - 30578) / 180098
=-0.1066

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 -3.21 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 1.02561.0460.97871.02030.9881.03131.01981.03261.07261.0637
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 0.93120.94881.04620.95080.95560.93910.96251.04270.90530.9205
LVGI 1.3531.16611.09180.96250.91351.0370.9560.98121.09471.1464
TATA -0.0517-0.0645-0.063-0.0413-0.0643-0.0382-0.1215-0.0492-0.0576-0.0979
M-score -2.58-2.56-2.61-2.87-2.62-2.55-2.98-2.63-2.54-3.09

Microsoft Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.00390.9761.02651.00211.02830.90390.80960.85020.89530.9509
GMI 1.02471.05771.07841.07261.0961.08381.07411.06371.03421.0271
AQI 0.93250.96750.96751.20381.14891.12261.09780.79730.80740.7895
SGI 1.11071.1441.09651.11541.13851.12011.13721.07770.99180.9425
DEPI 0.96641.01941.0180.95510.90050.88370.91020.99331.05571.1026
SGAI 1.00120.94290.9060.90530.90330.91460.93870.92050.94980.9818
LVGI 0.9841.03991.06851.09471.12151.05981.10721.14641.19961.2317
TATA -0.0408-0.0349-0.0396-0.0589-0.0647-0.0664-0.0667-0.0979-0.0994-0.1066
M-score -2.58-2.52-2.53-2.55-2.56-2.70-2.80-3.09-3.16-3.21
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