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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.76 (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.

Novo Nordisk A/S has a M-score of -3.01 suggests that the company is not a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -2.07
Current: -2.76

-3.35
-2.07

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -2.07. The lowest was -3.35. And the median was -2.78.


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 Novo Nordisk A/S 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 * 1.0005+0.528 * 0.9837+0.404 * 1.11+0.892 * 1.0181+0.115 * 0.3215
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9632+4.679 * -0.0893-0.327 * 1.2727
=-3.01

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $2,138 Mil.
Revenue was 4071.47156184 + 3654.61031992 + 4073.66903614 + 3852.17376249 = $15,652 Mil.
Gross Profit was 3490.8215468 + 3092.78649534 + 3411.0453845 + 3258.99890922 = $13,254 Mil.
Total Current Assets was $7,123 Mil.
Total Assets was $12,235 Mil.
Property, Plant and Equipment(Net PPE) was $3,556 Mil.
Depreciation, Depletion and Amortization(DDA) was $763 Mil.
Selling, General & Admin. Expense(SGA) was $4,684 Mil.
Total Current Liabilities was $5,807 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1255.34155883 + 1432.25918728 + 1081.83791486 + 1125.40471285 = $4,895 Mil.
Non Operating Income was 0 + 344.57754445 + -75.8893804577 + 0 = $269 Mil.
Cash Flow from Operations was 1801.6852242 + 595.469443397 + 1209.75625922 + 2111.77865886 = $5,719 Mil.
Accounts Receivable was $2,099 Mil.
Revenue was 3942.50925065 + 3768.61800667 + 3987.13708196 + 3675.14782297 = $15,373 Mil.
Gross Profit was 3273.36359162 + 3126.52834383 + 3362.36677692 + 3043.54058412 = $12,806 Mil.
Total Current Assets was $6,237 Mil.
Total Assets was $11,608 Mil.
Property, Plant and Equipment(Net PPE) was $4,041 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $4,776 Mil.
Total Current Liabilities was $4,329 Mil.
Long-Term Debt was $0 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)
=(2137.97773097 / 15651.9246804) / (2098.94095988 / 15373.4121622)
=0.1365952 / 0.13653059
=1.0005

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)
=(3092.78649534 / 15373.4121622) / (3490.8215468 / 15651.9246804)
=0.83298354 / 0.8467746
=0.9837

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 - (7122.63015348 + 3555.82305146) / 12234.8781222) / (1 - (6236.67085908 + 4040.7575509) / 11607.6994586)
=0.12721213 / 0.11460247
=1.11

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
=15651.9246804 / 15373.4121622
=1.0181

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))
=(243.291738164 / (243.291738164 + 4040.7575509)) / (762.823667656 / (762.823667656 + 3555.82305146))
=0.05679014 / 0.17663489
=0.3215

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)
=(4683.84577337 / 15651.9246804) / (4776.14192334 / 15373.4121622)
=0.29925047 / 0.31067546
=0.9632

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)
=((0 + 5806.9515498) / 12234.8781222) / ((0 + 4328.75813419) / 11607.6994586)
=0.47462275 / 0.37292128
=1.2727

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
=(4894.84337383 - 268.688163992 - 5718.68958567) / 12234.8781222
=-0.0893

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.

Novo Nordisk A/S has a M-score of -3.01 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.

Novo Nordisk A/S Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.01480.93911.09280.99160.95741.01141.00750.87671.05651.1252
GMI 0.99260.96750.98260.98430.97790.98490.9970.97920.99590.9938
AQI 1.03091.33911.02240.71450.90921.12681.10030.93591.50551.0891
SGI 1.01761.27961.19091.01121.21011.07781.08881.1691.11910.9582
DEPI 1.10090.92760.71571.14750.98961.09090.92861.04060.980.8772
SGAI 0.99341.03240.98460.97431.02750.98260.95870.94991.010.9366
LVGI 1.24640.89940.95861.1330.9541.17631.06411.00171.04531.2693
TATA -0.085-0.0343-0.0798-0.0736-0.0832-0.1057-0.0698-0.0119-0.0256-0.0617
M-score -2.91-2.31-2.61-2.97-2.76-2.90-2.70-2.52-2.26-2.75

Novo Nordisk A/S Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.96311.00851.01031.02861.07231.0005
GMI 0.99580.99820.9940.99420.99220.9837
AQI 1.40211.22531.33821.08911.2591.11
SGI 1.09671.06971.06381.04821.02031.0181
DEPI 00000.1550.3215
SGAI 0.98890.97320.96660.93450.94630.9632
LVGI 1.01720.94311.11871.26931.29871.2727
TATA 0.02680.0177-0.0662-0.0628-0.067-0.0893
M-score -2.26-2.33-2.74-2.86-2.79-3.01
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