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Microsoft Corp (NAS:MSFT)
Beneish M-Score
-3.09 (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 -3.09 suggests that the company is not a manipulator.

MSFT' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -2.11
Current: -3.09

-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 -2.62.


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 * 0.8502+0.528 * 1.0637+0.404 * 0.7973+0.892 * 1.0777+0.115 * 0.9933
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9205+4.679 * -0.0989-0.327 * 1.1464
=-3.09

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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 $124,712 Mil.
Total Assets was $176,223 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 $49,858 Mil.
Long-Term Debt was $27,808 Mil.
Net Income was -3195 + 4985 + 5863 + 4540 = $12,193 Mil.
Non Operating Income was 346 + -26 + 236 + -12 = $544 Mil.
Cash Flow from Operations was 6816 + 9570 + 4340 + 8354 = $29,080 Mil.
Accounts Receivable was $19,544 Mil.
Revenue was 23382 + 20403 + 24519 + 18529 = $86,833 Mil.
Gross Profit was 15749 + 14425 + 16197 + 13384 = $59,755 Mil.
Total Current Assets was $114,246 Mil.
Total Assets was $172,384 Mil.
Property, Plant and Equipment(Net PPE) was $13,011 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,212 Mil.
Selling, General & Admin. Expense(SGA) was $20,488 Mil.
Total Current Liabilities was $45,625 Mil.
Long-Term Debt was $20,645 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)
=(17908 / 93580) / (19544 / 86833)
=0.19136568 / 0.22507572
=0.8502

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)
=(14568 / 86833) / (14712 / 93580)
=0.68816003 / 0.64695448
=1.0637

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 - (124712 + 14731) / 176223) / (1 - (114246 + 13011) / 172384)
=0.20871282 / 0.26178184
=0.7973

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
=93580 / 86833
=1.0777

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))
=(5212 / (5212 + 13011)) / (5957 / (5957 + 14731))
=0.28601218 / 0.2879447
=0.9933

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)
=(20324 / 93580) / (20488 / 86833)
=0.21718316 / 0.23594716
=0.9205

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)
=((27808 + 49858) / 176223) / ((20645 + 45625) / 172384)
=0.44072567 / 0.38443243
=1.1464

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
=(12193 - 544 - 29080) / 176223
=-0.0989

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 -3.09 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 1.02561.0460.97871.02030.9881.03131.01981.03021.07521.0637
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 0.93120.94881.04620.95080.95560.93910.96251.04970.89930.9205
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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.05111.04941.00390.9761.02651.00211.02830.90390.80960.8502
GMI 1.01811.03021.02231.05531.07581.07521.09851.08621.07661.0637
AQI 0.83860.94460.93250.96750.96751.20381.14891.12261.09780.7973
SGI 1.04081.0561.11071.1441.09651.11541.13851.12011.13721.0777
DEPI 0.92310.96670.96641.01941.0180.95510.90050.88370.91020.9933
SGAI 1.02791.04971.00780.94920.91220.89930.89740.90850.93230.9205
LVGI 1.01320.98120.9841.03991.06851.09471.12151.05981.10721.1464
TATA -0.1065-0.0492-0.0408-0.0349-0.0396-0.0589-0.0647-0.0674-0.0678-0.0989
M-score -2.97-2.63-2.58-2.52-2.53-2.55-2.55-2.70-2.80-3.09
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