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GuruFocus has detected 1 Warning Sign with NCR Corp $NCR.
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NCR Corp (NYSE:NCR)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

NCR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.11   Max: -2.03
Current: -2.9

-3.11
-2.03

During the past 13 years, the highest Beneish M-Score of NCR Corp was -2.03. The lowest was -3.11. And the median was -2.60.


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 * 0.9597+0.528 * 0.8338+0.404 * 0.9849+0.892 * 1.0372+0.115 * 0.9517
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8622+4.679 * -0.0735-0.327 * 1.0001
=-2.90

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,298 Mil.
Revenue was 1478 + 1802 + 1677 + 1620 = $6,577 Mil.
Gross Profit was 413 + 479 + 477 + 446 = $1,815 Mil.
Total Current Assets was $2,780 Mil.
Total Assets was $7,725 Mil.
Property, Plant and Equipment(Net PPE) was $288 Mil.
Depreciation, Depletion and Amortization(DDA) was $340 Mil.
Selling, General & Admin. Expense(SGA) was $931 Mil.
Total Current Liabilities was $2,159 Mil.
Long-Term Debt was $3,076 Mil.
Net Income was 57 + 57 + 105 + 76 = $295 Mil.
Non Operating Income was -7 + -21 + -8 + -15 = $-51 Mil.
Cash Flow from Operations was 43 + 555 + 215 + 101 = $914 Mil.
Accounts Receivable was $1,304 Mil.
Revenue was 1444 + 1680 + 1613 + 1604 = $6,341 Mil.
Gross Profit was 380 + 476 + 457 + 146 = $1,459 Mil.
Total Current Assets was $2,705 Mil.
Total Assets was $7,752 Mil.
Property, Plant and Equipment(Net PPE) was $302 Mil.
Depreciation, Depletion and Amortization(DDA) was $321 Mil.
Selling, General & Admin. Expense(SGA) was $1,041 Mil.
Total Current Liabilities was $1,984 Mil.
Long-Term Debt was $3,269 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)
=(1298 / 6577) / (1304 / 6341)
=0.19735442 / 0.2056458
=0.9597

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)
=(1459 / 6341) / (1815 / 6577)
=0.23008989 / 0.27596168
=0.8338

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 - (2780 + 288) / 7725) / (1 - (2705 + 302) / 7752)
=0.6028479 / 0.6121001
=0.9849

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
=6577 / 6341
=1.0372

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))
=(321 / (321 + 302)) / (340 / (340 + 288))
=0.5152488 / 0.54140127
=0.9517

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)
=(931 / 6577) / (1041 / 6341)
=0.1415539 / 0.16416969
=0.8622

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)
=((3076 + 2159) / 7725) / ((3269 + 1984) / 7752)
=0.6776699 / 0.67763158
=1.0001

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
=(295 - -51 - 914) / 7725
=-0.0735

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 -2.90 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 local exchange's currency.

NCR Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0590.73161.1311.01390.99020.93051.16980.9740.91960.9845
GMI 0.96680.94011.16250.91111.16920.62611.01021.08141.140.8463
AQI 0.95381.13231.0760.94861.45430.85971.0111.40771.05170.9669
SGI 1.08471.06940.86771.02151.12311.0831.06861.07640.96691.0267
DEPI 0.95680.99490.98841.25970.80860.74140.94290.88930.85430.8968
SGAI 0.96420.97471.04251.03971.15680.76981.09851.07941.06490.8656
LVGI 0.96761.03960.85160.9611.31881.32281.12461.00111.02380.9843
TATA -0.0172-0.0313-0.0535-0.0259-0.10190.1050.0211-0.0341-0.1044-0.0743
M-score -2.46-2.80-2.57-2.60-2.74-2.33-2.22-2.41-3.01-2.90

NCR Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9740.93360.92951.01280.91960.95180.99750.98010.98450.9597
GMI 1.08141.10091.37161.27791.141.13220.76340.79610.84630.8338
AQI 1.40771.03841.01491.01551.05171.02981.04731.02720.96690.9849
SGI 1.07641.0511.02220.99510.96690.96820.97880.99381.02671.0372
DEPI 0.88930.81840.84350.85660.85430.87970.85920.87530.89680.9517
SGAI 1.07941.06411.17571.17921.06491.08380.87750.87160.86560.8622
LVGI 1.00110.9621.00450.9781.02381.05521.01911.01420.98431.0001
TATA -0.0341-0.0415-0.1066-0.104-0.1044-0.0962-0.0338-0.0401-0.0743-0.0735
M-score -2.41-2.64-2.87-2.85-3.01-2.97-2.77-2.79-2.90-2.90
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