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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.56 (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 -2.55 suggests that the company is not a manipulator.

NVO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -0.58
Current: -2.56

-3.35
-0.58

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -0.58. The lowest was -3.35. And the median was -2.71.


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 * 1.0587+0.528 * 0.9981+0.404 * 0.7586+0.892 * 1.0513+0.115 * 1.3725
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9835+4.679 * -0.0262-0.327 * 0.9913
=-2.55

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $2,380 Mil.
Revenue was 4147.25872225 + 4062.34138477 + 4213.62906756 + 4032.08572246 = $16,455 Mil.
Gross Profit was 3536.32381815 + 3430.26901144 + 3541.22282212 + 3453.12805695 = $13,961 Mil.
Total Current Assets was $7,948 Mil.
Total Assets was $13,332 Mil.
Property, Plant and Equipment(Net PPE) was $4,097 Mil.
Depreciation, Depletion and Amortization(DDA) was $445 Mil.
Selling, General & Admin. Expense(SGA) was $4,843 Mil.
Total Current Liabilities was $6,272 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1505.51276242 + 1411.48896784 + 1205.0196994 + 1261.60699505 = $5,384 Mil.
Non Operating Income was 0 + 0 + -868.232890705 + 0 = $-868 Mil.
Cash Flow from Operations was 2189.54840659 + 1115.90481593 + 1476.57960018 + 1819.19424504 = $6,601 Mil.
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 $552 Mil.
Selling, General & Admin. Expense(SGA) was $4,684 Mil.
Total Current Liabilities was $5,807 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)
=(2379.70095152 / 16455.314897) / (2137.97773097 / 15651.9246804)
=0.14461595 / 0.1365952
=1.0587

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)
=(13253.6523359 / 15651.9246804) / (13960.9437087 / 16455.314897)
=0.8467746 / 0.84841547
=0.9981

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 - (7948.34617127 + 4096.81317022) / 13331.6719529) / (1 - (7122.63015348 + 3555.82305146) / 12234.8781222)
=0.09650047 / 0.12721213
=0.7586

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
=16455.314897 / 15651.9246804
=1.0513

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))
=(552.244100924 / (552.244100924 + 3555.82305146)) / (444.819803334 / (444.819803334 + 4096.81317022))
=0.13442918 / 0.0979427
=1.3725

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)
=(4843.1725779 / 16455.314897) / (4683.84577337 / 15651.9246804)
=0.29432269 / 0.29925047
=0.9835

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 + 6272.16432563) / 13331.6719529) / ((0 + 5806.9515498) / 12234.8781222)
=0.47047095 / 0.47462275
=0.9913

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
=(5383.62842472 - -868.232890705 - 6601.22706773) / 13331.6719529
=-0.0262

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 -2.55 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.93911.09280.99160.95741.01141.00750.87671.05651.12520.977
GMI 0.96750.98260.98430.97790.98490.9970.97920.99590.99380.9835
AQI 1.33911.02240.71450.90921.12681.10030.93591.50551.08911.2223
SGI 1.27961.19091.01121.21011.07781.08881.1691.11910.95821.0703
DEPI 0.92760.71571.14750.98961.09090.92861.04060.980.87721.2453
SGAI 1.03240.98460.97431.02750.98260.95870.94991.010.93660.9892
LVGI 0.89940.95861.1330.9541.17631.06411.00171.04531.26931.0185
TATA -0.0282-0.0731-0.0624-0.0832-0.1057-0.06980.0144-0.0256-0.06170.0275
M-score -2.28-2.58-2.92-2.76-2.90-2.70-2.40-2.26-2.75-2.20

Novo Nordisk A/S Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.96311.00851.01031.02861.07231.00051.07111.02381.0991.0587
GMI 0.99580.99820.9940.99420.99220.98370.98580.98320.98850.9981
AQI 1.40211.22531.33821.08911.2591.111.08551.22230.90390.7586
SGI 1.09671.06971.06381.04821.02031.01811.01811.02141.05521.0513
DEPI 00000.20110.42250.93991.29311.43321.3725
SGAI 0.98890.97320.96660.93450.94630.96320.960.99061.00060.9835
LVGI 1.01720.94311.11871.26931.29871.27271.07331.01850.91990.9913
TATA 0.02680.0177-0.0662-0.0628-0.0363-0.0611-0.02490.0246-0.0172-0.0262
M-score -2.26-2.33-2.74-2.86-2.65-2.86-2.51-2.21-2.39-2.55
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