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Microsoft Corporation (NAS:MSFT)
Beneish M-Score
-2.52 (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 Corporation has a M-score of -2.52 suggests that the company is not a manipulator.

MSFT' s 10-Year Beneish M-Score Range
Min: -3.1   Max: -2.06
Current: -2.52

-3.1
-2.06

During the past 13 years, the highest Beneish M-Score of Microsoft Corporation was -2.06. The lowest was -3.10. And the median was -2.65.


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 Corporation 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 * 0.976+0.528 * 1.054+0.404 * 0.9675+0.892 * 1.144+0.115 * 1.0194
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9523+4.679 * -0.0335-0.327 * 1.0399
=-2.52

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $15,986 Mil.
Revenue was 24519 + 18529 + 19896 + 20489 = $83,433 Mil.
Gross Profit was 16235 + 13415 + 14294 + 15702 = $59,646 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 $20,720 Mil.
Total Current Liabilities was $33,742 Mil.
Long-Term Debt was $20,676 Mil.
Net Income was 6558 + 5244 + 4965 + 6055 = $22,822 Mil.
Non Operating Income was -175 + 13 + -10 + -50 = $-222 Mil.
Cash Flow from Operations was 4413 + 8205 + 5903 + 9666 = $28,187 Mil.
Accounts Receivable was $14,317 Mil.
Revenue was 21456 + 16008 + 18059 + 17407 = $72,930 Mil.
Gross Profit was 15764 + 11840 + 13896 + 13455 = $54,955 Mil.
Total Current Assets was $89,574 Mil.
Total Assets was $128,683 Mil.
Property, Plant and Equipment(Net PPE) was $8,698 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,282 Mil.
Selling, General & Admin. Expense(SGA) was $19,018 Mil.
Total Current Liabilities was $31,910 Mil.
Long-Term Debt was $11,947 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)
=(15986 / 83433) / (14317 / 72930)
=0.19160284 / 0.19631153
=0.976

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)
=(13415 / 72930) / (16235 / 83433)
=0.75353078 / 0.71489698
=1.054

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 - (106870 + 11567) / 153543) / (1 - (89574 + 8698) / 128683)
=0.22863953 / 0.23632492
=0.9675

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
=83433 / 72930
=1.144

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))
=(3282 / (3282 + 8698)) / (4251 / (4251 + 11567))
=0.27395659 / 0.26874447
=1.0194

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)
=(20720 / 83433) / (19018 / 72930)
=0.24834298 / 0.2607706
=0.9523

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)
=((20676 + 33742) / 153543) / ((11947 + 31910) / 128683)
=0.35441538 / 0.34081425
=1.0399

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
=(22822 - -222 - 28187) / 153543
=-0.0335

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 Corporation has a M-score of -2.52 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 Corporation Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 0.99051.12851.16581.05421.01410.85161.08751.02880.99891.0494
GMI 0.99280.96381.02561.0460.97871.02030.9881.03131.01981.0302
AQI 0.90571.22440.90461.17141.08440.84490.97890.890.97660.9446
SGI 1.14441.08021.11291.15451.18190.96721.06931.11941.0541.056
DEPI 1.14081.26431.16750.91991.00380.97650.9781.0250.95850.9667
SGAI 1.16410.91140.93120.94881.04620.95080.95560.93910.96251.0497
LVGI 0.92781.50251.3531.16611.09180.96250.91351.0370.9560.9812
TATA -0.1019-0.0906-0.0517-0.0645-0.063-0.0413-0.0643-0.0382-0.1215-0.0492
M-score -2.87-2.76-2.58-2.56-2.61-2.87-2.62-2.55-2.98-2.63

Microsoft Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.97320.98091.02640.99890.95561.03681.05111.04941.00390.976
GMI 1.04531.03641.01911.01981.02611.01361.01811.03021.02181.054
AQI 0.84951.05091.09140.97661.07820.83620.83860.94460.93250.9675
SGI 1.08151.08041.06441.0541.01741.01221.04081.0561.11071.144
DEPI 1.00391.00811.00670.95850.98750.94870.92310.96670.96641.0194
SGAI 0.9770.98580.990.96250.98041.01051.02791.04971.00930.9523
LVGI 0.89890.90280.89560.9560.96711.02541.01320.98120.9841.0399
TATA -0.0359-0.049-0.052-0.1215-0.1327-0.1175-0.1065-0.0492-0.0408-0.0335
M-score -2.60-2.58-2.56-2.98-3.07-3.06-2.97-2.63-2.58-2.52
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