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NCR Corporation (NYSE:NCR)
Beneish M-Score
-2.23 (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 Corporation has a M-score of -2.23 suggests that the company is not a manipulator.

NCR' s 10-Year Beneish M-Score Range
Min: -3.07   Max: -2.11
Current: -2.23

-3.07
-2.11

During the past 13 years, the highest Beneish M-Score of NCR Corporation was -2.11. The lowest was -3.07. And the median was -2.53.


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 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 * 1.1538+0.528 * 1.0102+0.404 * 1.011+0.892 * 1.0686+0.115 * 0.9429
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0985+4.679 * 0.0218-0.327 * 1.1246
=-2.23

* 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 $1,339 Mil.
Revenue was 1670 + 1508 + 1535 + 1410 = $6,123 Mil.
Gross Profit was 530 + 415 + 426 + 369 = $1,740 Mil.
Total Current Assets was $4,339 Mil.
Total Assets was $8,108 Mil.
Property, Plant and Equipment(Net PPE) was $352 Mil.
Depreciation, Depletion and Amortization(DDA) was $208 Mil.
Selling, General & Admin. Expense(SGA) was $871 Mil.
Total Current Liabilities was $1,881 Mil.
Long-Term Debt was $3,320 Mil.
Net Income was 198 + 98 + 86 + 61 = $443 Mil.
Non Operating Income was -11 + -3 + -3 + 2 = $-15 Mil.
Cash Flow from Operations was 265 + 27 + -33 + 22 = $281 Mil.
Accounts Receivable was $1,086 Mil.
Revenue was 1642 + 1435 + 1409 + 1244 = $5,730 Mil.
Gross Profit was 574 + 382 + 374 + 315 = $1,645 Mil.
Total Current Assets was $3,406 Mil.
Total Assets was $6,369 Mil.
Property, Plant and Equipment(Net PPE) was $308 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $742 Mil.
Total Current Liabilities was $1,742 Mil.
Long-Term Debt was $1,891 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)
=(1339 / 6123) / (1086 / 5730)
=0.21868365 / 0.1895288
=1.1538

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)
=(415 / 5730) / (530 / 6123)
=0.28708551 / 0.28417442
=1.0102

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 - (4339 + 352) / 8108) / (1 - (3406 + 308) / 6369)
=0.42143562 / 0.41686293
=1.011

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
=6123 / 5730
=1.0686

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))
=(166 / (166 + 308)) / (208 / (208 + 352))
=0.35021097 / 0.37142857
=0.9429

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)
=(871 / 6123) / (742 / 5730)
=0.14225053 / 0.12949389
=1.0985

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)
=((3320 + 1881) / 8108) / ((1891 + 1742) / 6369)
=0.64146522 / 0.57041922
=1.1246

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
=(443 - -15 - 281) / 8108
=0.0218

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 Corporation has a M-score of -2.23 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 Corporation 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 Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.12390.99020.97430.94760.87380.97171.04061.09481.12021.1538
GMI 0.87380.94070.92040.89290.86850.77820.80980.84110.87441.0102
AQI 1.35631.45431.4511.47281.02960.85971.04431.02051.04261.011
SGI 1.04881.12311.15551.16091.14031.0831.07651.07271.07141.0686
DEPI 1.36580.80860.63720.56690.51560.74140.92730.94260.96560.9429
SGAI 1.02031.03211.06061.0720.98580.86290.87720.90140.93791.0985
LVGI 1.39381.31881.28841.22981.09531.32281.32661.41.10851.1246
TATA -0.0296-0.0519-0.0496-0.03410.04390.1060.11120.11860.05550.0218
M-score -2.47-2.60-2.60-2.55-2.41-2.22-2.03-1.97-2.12-2.23
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