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GuruFocus has detected 4 Warning Signs 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: -3.07   Max: -2.11
Current: -2.9

-3.07
-2.11

During the past 13 years, the highest Beneish M-Score of NCR Corp was -2.11. The lowest was -3.07. And the median was -2.58.


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 * 0.9845+0.528 * 0.8463+0.404 * 0.9669+0.892 * 1.0267+0.115 * 0.8968
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8656+4.679 * -0.0743-0.327 * 0.9843
=-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 (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,225 Mil.
Revenue was 1802 + 1677 + 1620 + 1444 = $6,543 Mil.
Gross Profit was 479 + 477 + 446 + 380 = $1,782 Mil.
Total Current Assets was $2,757 Mil.
Total Assets was $7,673 Mil.
Property, Plant and Equipment(Net PPE) was $287 Mil.
Depreciation, Depletion and Amortization(DDA) was $344 Mil.
Selling, General & Admin. Expense(SGA) was $926 Mil.
Total Current Liabilities was $1,965 Mil.
Long-Term Debt was $3,001 Mil.
Net Income was 57 + 105 + 76 + 32 = $270 Mil.
Non Operating Income was -21 + -8 + -15 + -10 = $-54 Mil.
Cash Flow from Operations was 555 + 215 + 101 + 23 = $894 Mil.
Accounts Receivable was $1,212 Mil.
Revenue was 1680 + 1613 + 1604 + 1476 = $6,373 Mil.
Gross Profit was 476 + 457 + 146 + 390 = $1,469 Mil.
Total Current Assets was $2,549 Mil.
Total Assets was $7,635 Mil.
Property, Plant and Equipment(Net PPE) was $322 Mil.
Depreciation, Depletion and Amortization(DDA) was $308 Mil.
Selling, General & Admin. Expense(SGA) was $1,042 Mil.
Total Current Liabilities was $1,781 Mil.
Long-Term Debt was $3,239 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)
=(1225 / 6543) / (1212 / 6373)
=0.18722299 / 0.19017731
=0.9845

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)
=(1469 / 6373) / (1782 / 6543)
=0.23050369 / 0.27235213
=0.8463

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 - (2757 + 287) / 7673) / (1 - (2549 + 322) / 7635)
=0.60328424 / 0.62396857
=0.9669

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
=6543 / 6373
=1.0267

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))
=(308 / (308 + 322)) / (344 / (344 + 287))
=0.48888889 / 0.5451664
=0.8968

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)
=(926 / 6543) / (1042 / 6373)
=0.14152529 / 0.16350228
=0.8656

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)
=((3001 + 1965) / 7673) / ((3239 + 1781) / 7635)
=0.64720448 / 0.65749836
=0.9843

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
=(270 - -54 - 894) / 7673
=-0.0743

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

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.98320.9740.93360.92951.01280.91960.95180.99750.98010.9845
GMI 1.03851.08141.10091.37161.27791.141.13220.76340.79610.8463
AQI 1.21111.40771.03841.01491.01551.05171.02981.04731.02720.9669
SGI 1.06531.07641.0511.02220.99510.96690.96820.97880.99381.0267
DEPI 0.89630.88930.81840.84350.85660.85430.87970.85920.87530.8968
SGAI 1.03961.07941.06411.17571.17921.06491.08380.87750.87160.8656
LVGI 1.14191.00110.9621.00450.9781.02381.05521.01911.01420.9843
TATA -0.0134-0.0341-0.0415-0.1066-0.104-0.1044-0.0962-0.0338-0.0401-0.0743
M-score -2.46-2.41-2.64-2.87-2.85-3.01-2.97-2.77-2.79-2.90
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