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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.17 (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 -2.21 signals that the company is a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.45   Max: -1.98
Current: -2.17

-3.45
-1.98

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -1.98. The lowest was -3.45. And the median was -2.77.


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 * 1.0149+0.528 * 0.9983+0.404 * 1.2253+0.892 * 1.0671+0.115 * 0.9916
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9728+4.679 * 0.0179-0.327 * 0.9431
=-2.21

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,090 Mil.
Revenue was 3925.40834846 + 3763.04106548 + 3960.21171747 + 3752.46981339 = $15,401 Mil.
Gross Profit was 3259.16515426 + 3121.90159083 + 3339.66052199 + 3107.5740944 = $12,828 Mil.
Total Current Assets was $6,210 Mil.
Total Assets was $11,557 Mil.
Property, Plant and Equipment(Net PPE) was $4,023 Mil.
Depreciation, Depletion and Amortization(DDA) was $511 Mil.
Selling, General & Admin. Expense(SGA) was $4,784 Mil.
Total Current Liabilities was $4,310 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1269.32849365 + 1194.59859415 + 1104.763643 + 1173.61873399 = $4,742 Mil.
Non Operating Income was 0 + 0 + 190.728235079 + 0 = $191 Mil.
Cash Flow from Operations was 1474.59165154 + 752.682204957 + 980.470888848 + 1137.39480424 = $4,345 Mil.
Accounts Receivable was $1,930 Mil.
Revenue was 3752.19375219 + 3491.09014675 + 3737.20805848 + 3451.90467907 = $14,432 Mil.
Gross Profit was 3119.34011934 + 2860.5870021 + 3175.07577108 + 2845.71229779 = $12,001 Mil.
Total Current Assets was $6,410 Mil.
Total Assets was $11,283 Mil.
Property, Plant and Equipment(Net PPE) was $3,817 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $4,609 Mil.
Total Current Liabilities was $4,461 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)
=(2089.83666062 / 15401.1309448) / (1929.62442962 / 14432.3966365)
=0.13569371 / 0.1337009
=1.0149

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)
=(3121.90159083 / 14432.3966365) / (3259.16515426 / 15401.1309448)
=0.83151229 / 0.83294541
=0.9983

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 - (6209.61887477 + 4023.23049002) / 11557.3502722) / (1 - (6410.14391014 + 3817.3043173) / 11282.7307827)
=0.11460247 / 0.09353078
=1.2253

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
=15401.1309448 / 14432.3966365
=1.0671

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))
=(480.121233732 / (480.121233732 + 3817.3043173)) / (510.859645921 / (510.859645921 + 4023.23049002))
=0.11172299 / 0.11267082
=0.9916

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)
=(4784.06745338 / 15401.1309448) / (4608.53190338 / 14432.3966365)
=0.31063092 / 0.31931855
=0.9728

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 + 4309.98185118) / 11557.3502722) / ((0 + 4461.21446121) / 11282.7307827)
=0.37292128 / 0.39540201
=0.9431

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
=(4742.3094648 - 190.728235079 - 4345.13954959) / 11557.3502722
=0.0179

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 -2.21 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.97441.01480.93911.09280.99160.95741.01141.00750.87671.0565
GMI 0.9960.99260.96750.98260.98430.97790.98490.9970.97920.9959
AQI 1.49181.03091.33911.02240.71450.90921.12681.10030.93591.5055
SGI 1.14211.06271.2331.22580.97981.20641.11371.05661.20771.0965
DEPI 0.90391.10090.92760.71571.14750.98961.09090.92861.04060.98
SGAI 0.96890.99341.03240.98460.97431.02750.98260.95870.94991.01
LVGI 1.0541.24640.89940.95861.1330.9541.17631.06411.00171.0453
TATA -0.0811-0.085-0.0343-0.0798-0.0736-0.0832-0.1057-0.0698-0.0119-0.0256
M-score -2.58-2.87-2.35-2.58-3.00-2.76-2.86-2.73-2.49-2.28

Novo Nordisk A/S Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.6520.64010.70180.72380.97351.02440.92741.04890.9571.0149
GMI 0.99710.99120.98150.9820.97790.98140.98670.99590.99590.9983
AQI 1.1991.15321.40710.93591.14271.43481.18991.50551.40211.2253
SGI 1.46841.4161.43831.46281.12061.15021.13761.10441.09611.0671
DEPI 0.69230.4790.27941.04061.02621.07541.060.980.99840.9916
SGAI 0.98130.94470.93830.93780.95390.97861.00291.00950.98830.9728
LVGI 1.15651.28641.19291.00171.11620.990.93861.04531.01720.9431
TATA -0.0751-0.1029-0.0647-0.0064-0.00930.00890.0406-0.02470.0270.0179
M-score -2.74-3.01-2.65-2.37-2.42-2.10-2.14-2.27-2.15-2.21
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