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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-2.70 (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 -2.70 suggests that the company is not a manipulator.

MSFT' s 10-Year Beneish M-Score Range
Min: -3.1   Max: -2.06
Current: -2.7

-3.1
-2.06

During the past 13 years, the highest Beneish M-Score of Microsoft Corp was -2.06. The lowest was -3.10. And the median was -2.63.


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 * 0.9039+0.528 * 1.0849+0.404 * 1.1226+0.892 * 1.1201+0.115 * 0.8837
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9118+4.679 * -0.0674-0.327 * 1.0598
=-2.70

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $16,186 Mil.
Revenue was 26470 + 23201 + 23382 + 20403 = $93,456 Mil.
Gross Profit was 16334 + 14928 + 15787 + 14462 = $61,511 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 $21,091 Mil.
Total Current Liabilities was $47,415 Mil.
Long-Term Debt was $18,260 Mil.
Net Income was 5863 + 4540 + 4612 + 5660 = $20,675 Mil.
Non Operating Income was 236 + -12 + -1 + -62 = $161 Mil.
Cash Flow from Operations was 4340 + 8354 + 9514 + 10099 = $32,307 Mil.
Accounts Receivable was $15,986 Mil.
Revenue was 24519 + 18529 + 19896 + 20489 = $83,433 Mil.
Gross Profit was 16197 + 13384 + 14294 + 15702 = $59,577 Mil.
Total Current Assets was $106,870 Mil.
Total Assets was $153,543 Mil.
Property, Plant and Equipment(Net PPE) was $11,567 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,251 Mil.
Selling, General & Admin. Expense(SGA) was $20,651 Mil.
Total Current Liabilities was $33,742 Mil.
Long-Term Debt was $20,676 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)
=(16186 / 93456) / (15986 / 83433)
=0.1731938 / 0.19160284
=0.9039

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)
=(14928 / 83433) / (16334 / 93456)
=0.71406997 / 0.65818139
=1.0849

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 - (116362 + 13607) / 174848) / (1 - (106870 + 11567) / 153543)
=0.25667437 / 0.22863953
=1.1226

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
=93456 / 83433
=1.1201

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))
=(4251 / (4251 + 11567)) / (5946 / (5946 + 13607))
=0.26874447 / 0.30409656
=0.8837

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)
=(21091 / 93456) / (20651 / 83433)
=0.22567839 / 0.24751597
=0.9118

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)
=((18260 + 47415) / 174848) / ((20676 + 33742) / 153543)
=0.37561196 / 0.35441538
=1.0598

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
=(20675 - 161 - 32307) / 174848
=-0.0674

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 -2.70 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 1.12851.16581.05421.01410.85161.08751.02880.99891.04941.0021
GMI 0.96381.02561.0460.97871.02030.9881.03131.01981.03021.0726
AQI 1.22440.90461.17141.08440.84490.97890.890.97660.94461.2038
SGI 1.08021.11291.15451.18190.96721.06931.11941.0541.0561.1154
DEPI 1.26431.16750.91991.00380.97650.9781.0250.95850.96670.9551
SGAI 0.91140.93120.94881.04620.95080.95560.93910.96251.04970.9056
LVGI 1.50251.3531.16611.09180.96250.91351.0370.9560.98121.0947
TATA -0.0906-0.0517-0.0645-0.063-0.0413-0.0643-0.0382-0.1215-0.0492-0.0576
M-score -2.76-2.58-2.56-2.61-2.87-2.62-2.55-2.98-2.63-2.54

Microsoft Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.95561.03681.05111.04941.00390.9761.02651.00211.02830.9039
GMI 1.02611.01361.01811.03021.02231.05531.07521.07381.09721.0849
AQI 1.07820.83620.83860.94460.93250.96750.96751.20381.14891.1226
SGI 1.01741.01221.04081.0561.11071.1441.09651.11541.13851.1201
DEPI 0.98750.94870.92310.96670.96641.01941.0180.95510.90050.8837
SGAI 0.98041.01051.02791.04971.00780.94920.91390.90260.90060.9118
LVGI 0.96711.02541.01320.98120.9841.03991.06851.09471.12151.0598
TATA -0.1327-0.1175-0.1065-0.0492-0.0408-0.0349-0.0396-0.0589-0.0647-0.0674
M-score -3.07-3.06-2.97-2.63-2.58-2.52-2.53-2.55-2.56-2.70
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