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NCR Corp (NYSE:NCR)
Beneish M-Score
-2.22 (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.

NCR Corp has a M-score of -2.22 suggests that the company is not a manipulator.

NCR' s 10-Year Beneish M-Score Range
Min: -3.11   Max: -1.97
Current: -2.22

-3.11
-1.97

During the past 13 years, the highest Beneish M-Score of NCR Corp was -1.97. The lowest was -3.11. And the median was -2.56.


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 NCR 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 * 1.1437+0.528 * 1.0048+0.404 * 1.1491+0.892 * 1.0568+0.115 * 0.9292
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.076+4.679 * 0.019-0.327 * 1.1536
=-2.22

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,442 Mil.
Revenue was 1518 + 1670 + 1508 + 1535 = $6,231 Mil.
Gross Profit was 416 + 530 + 415 + 426 = $1,787 Mil.
Total Current Assets was $3,385 Mil.
Total Assets was $8,828 Mil.
Property, Plant and Equipment(Net PPE) was $390 Mil.
Depreciation, Depletion and Amortization(DDA) was $230 Mil.
Selling, General & Admin. Expense(SGA) was $887 Mil.
Total Current Liabilities was $2,008 Mil.
Long-Term Debt was $3,885 Mil.
Net Income was 53 + 198 + 98 + 86 = $435 Mil.
Non Operating Income was -7 + -11 + -3 + -3 = $-24 Mil.
Cash Flow from Operations was 31 + 265 + 27 + -32 = $291 Mil.
Accounts Receivable was $1,193 Mil.
Revenue was 1410 + 1642 + 1435 + 1409 = $5,896 Mil.
Gross Profit was 369 + 574 + 382 + 374 = $1,699 Mil.
Total Current Assets was $3,013 Mil.
Total Assets was $6,655 Mil.
Property, Plant and Equipment(Net PPE) was $327 Mil.
Depreciation, Depletion and Amortization(DDA) was $172 Mil.
Selling, General & Admin. Expense(SGA) was $780 Mil.
Total Current Liabilities was $1,837 Mil.
Long-Term Debt was $2,014 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)
=(1442 / 6231) / (1193 / 5896)
=0.23142353 / 0.20234057
=1.1437

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)
=(530 / 5896) / (416 / 6231)
=0.28816147 / 0.28679185
=1.0048

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 - (3385 + 390) / 8828) / (1 - (3013 + 327) / 6655)
=0.57238333 / 0.49812171
=1.1491

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
=6231 / 5896
=1.0568

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))
=(172 / (172 + 327)) / (230 / (230 + 390))
=0.34468938 / 0.37096774
=0.9292

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)
=(887 / 6231) / (780 / 5896)
=0.14235275 / 0.13229308
=1.076

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)
=((3885 + 2008) / 8828) / ((2014 + 1837) / 6655)
=0.66753512 / 0.57866266
=1.1536

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
=(435 - -24 - 291) / 8828
=0.019

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.

NCR Corp has a M-score of -2.22 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.

NCR Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.99181.3130.7751.0590.73161.1311.01390.99020.97171.1538
GMI 1.01471.31591.01440.96680.94011.16250.91110.94070.77821.0102
AQI 0.8730.9250.80680.95381.13231.0760.94861.45430.85971.011
SGI 1.0690.76221.00461.08471.06940.86771.02151.12311.0831.0686
DEPI 1.79430.92010.9250.95680.99490.98841.25970.80860.74140.9429
SGAI 0.91150.79460.94210.96420.97471.04251.03971.03210.86291.0985
LVGI 1.06251.00861.07680.96761.03960.85160.9611.31881.32281.1246
TATA -0.01760.0011-0.018-0.0172-0.0313-0.0535-0.0259-0.05190.1060.0218
M-score -2.47-2.24-2.86-2.46-2.80-2.57-2.60-2.60-2.22-2.23

NCR Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.99020.97430.94760.87380.97171.04061.09481.12021.15381.1437
GMI 0.94070.92040.89290.86850.77820.80980.84110.87441.01021.0048
AQI 1.45431.4511.47281.02960.85971.04431.02051.04261.0111.1491
SGI 1.12311.15551.16091.14031.0831.07651.07271.07141.06861.0568
DEPI 0.80860.63720.56690.51560.74140.92730.94260.96560.94290.9292
SGAI 1.03211.06061.0720.98580.86290.87720.90140.93791.09851.076
LVGI 1.31881.28841.22981.09531.32281.32661.41.10851.12461.1536
TATA -0.0519-0.0496-0.03410.04390.1060.11130.11860.05550.02180.019
M-score -2.60-2.60-2.55-2.41-2.22-2.03-1.97-2.12-2.23-2.22
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