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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.00 (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 -2.29 suggests that the company is not a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.66   Max: -2
Current: -2

-3.66
-2

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -2.00. The lowest was -3.66. And the median was -2.80.


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 * 1.0355+0.528 * 0.9959+0.404 * 1.5055+0.892 * 1.1044+0.115 * 0.98
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0095+4.679 * -0.0247-0.327 * 1.0453
=-2.29

* 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 $2,769 Mil.
Revenue was 3960.21171747 + 3752.46981339 + 3752.19375219 + 3491.09014675 = $14,956 Mil.
Gross Profit was 3339.66052199 + 3107.5740944 + 3119.34011934 + 2860.5870021 = $12,427 Mil.
Total Current Assets was $7,676 Mil.
Total Assets was $12,838 Mil.
Property, Plant and Equipment(Net PPE) was $3,994 Mil.
Depreciation, Depletion and Amortization(DDA) was $511 Mil.
Selling, General & Admin. Expense(SGA) was $4,814 Mil.
Total Current Liabilities was $4,421 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1104.763643 + 1173.61873399 + 1181.81818182 + 1045.07337526 = $4,505 Mil.
Non Operating Income was 190.728235079 + 0 + 0 + 0 = $191 Mil.
Cash Flow from Operations was 980.470888848 + 1137.39480424 + 1278.16777817 + 1235.15024458 = $4,631 Mil.
Accounts Receivable was $2,422 Mil.
Revenue was 3737.20805848 + 3451.90467907 + 3213.07146394 + 3140.10260039 = $13,542 Mil.
Gross Profit was 3175.07577108 + 2845.71229779 + 2647.96170985 + 2538.12135149 = $11,207 Mil.
Total Current Assets was $7,160 Mil.
Total Assets was $11,708 Mil.
Property, Plant and Equipment(Net PPE) was $3,840 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $4,318 Mil.
Total Current Liabilities was $3,858 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)
=(2769.48348239 / 14955.9654298) / (2421.82207167 / 13542.2868019)
=0.18517584 / 0.17883406
=1.0355

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)
=(3107.5740944 / 13542.2868019) / (3339.66052199 / 14955.9654298)
=0.82754643 / 0.83091672
=0.9959

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 - (7676.21828801 + 3993.79448805) / 12837.5615988) / (1 - (7160.45640934 + 3840.07844536) / 11707.7910501)
=0.09094787 / 0.06040902
=1.5055

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
=14955.9654298 / 13542.2868019
=1.1044

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 + 3840.07844536)) / (510.859645921 / (510.859645921 + 3993.79448805))
=0.11113404 / 0.11340707
=0.98

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)
=(4814.12166936 / 14955.9654298) / (4318.10191978 / 13542.2868019)
=0.32188639 / 0.31886062
=1.0095

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 + 4421.42726775) / 12837.5615988) / ((0 + 3857.72865038) / 11707.7910501)
=0.34441332 / 0.32950098
=1.0453

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
=(4505.27393407 - 190.728235079 - 4631.18371584) / 12837.5615988
=-0.0247

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 -2.29 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.94861.16110.92361.04111.09430.80570.97811.26220.91611.0429
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 -2.61-2.73-2.36-2.63-2.90-2.90-2.89-2.50-2.45-2.29

Novo Nordisk A/S Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.22181.57150.86080.84830.95260.75640.94750.97761.131.0355
GMI 0.99910.99420.99710.99120.98150.9820.97790.98140.98670.9959
AQI 0.82971.10031.1991.15321.40710.93591.14271.43481.18991.5055
SGI 0.8560.84871.46841.4161.43831.46281.12061.15021.13761.1044
DEPI 3.49230.92920.69230.4790.27941.04061.02621.07541.060.98
SGAI 0.98710.99660.98130.94470.93830.93780.95390.97861.00291.0095
LVGI 1.07261.06411.15651.28641.19291.00171.11620.990.93861.0453
TATA -0.1841-0.146-0.0751-0.1029-0.0647-0.0064-0.00930.00890.0406-0.0247
M-score -3.07-2.76-2.55-2.82-2.42-2.34-2.45-2.14-1.95-2.29
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