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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.20 (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 -2.33 suggests that the company is not a manipulator.

NVO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.01   Max: -0.58
Current: -2.2

-3.01
-0.58

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -0.58. The lowest was -3.01. And the median was -2.60.


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 * 1.0238+0.528 * 0.9832+0.404 * 1.2223+0.892 * 1.0214+0.115 * 1.2931
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9906+4.679 * -0.0011-0.327 * 1.0185
=-2.33

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $2,260 Mil.
Revenue was 4213.62906756 + 4032.08572246 + 4071.47156184 + 3654.61031992 = $15,972 Mil.
Gross Profit was 3541.22282212 + 3453.12805695 + 3490.8215468 + 3092.78649534 = $13,578 Mil.
Total Current Assets was $8,046 Mil.
Total Assets was $13,395 Mil.
Property, Plant and Equipment(Net PPE) was $3,728 Mil.
Depreciation, Depletion and Amortization(DDA) was $437 Mil.
Selling, General & Admin. Expense(SGA) was $4,761 Mil.
Total Current Liabilities was $5,964 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1205.0196994 + 1261.60699505 + 1255.34155883 + 1432.25918728 = $5,154 Mil.
Non Operating Income was -868.232890705 + 0 + 0 + 344.57754445 = $-524 Mil.
Cash Flow from Operations was 1476.57960018 + 1819.19424504 + 1801.6852242 + 595.469443397 = $5,693 Mil.
Accounts Receivable was $2,161 Mil.
Revenue was 4073.66903614 + 3852.17376249 + 3942.50925065 + 3768.61800667 = $15,637 Mil.
Gross Profit was 3411.0453845 + 3258.99890922 + 3273.36359162 + 3126.52834383 = $13,070 Mil.
Total Current Assets was $7,671 Mil.
Total Assets was $12,769 Mil.
Property, Plant and Equipment(Net PPE) was $3,834 Mil.
Depreciation, Depletion and Amortization(DDA) was $602 Mil.
Selling, General & Admin. Expense(SGA) was $4,705 Mil.
Total Current Liabilities was $5,582 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)
=(2259.59433825 / 15971.7966718) / (2160.858975 / 15636.9700559)
=0.14147402 / 0.13818911
=1.0238

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)
=(3453.12805695 / 15636.9700559) / (3541.22282212 / 15971.7966718)
=0.8358356 / 0.85012095
=0.9832

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 - (8046.11119218 + 3727.56457026) / 13395.4472494) / (1 - (7670.62683303 + 3833.57359447) / 12768.9682027)
=0.12106886 / 0.09905012
=1.2223

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
=15971.7966718 / 15636.9700559
=1.0214

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))
=(601.882524865 / (601.882524865 + 3833.57359447)) / (437.027525405 / (437.027525405 + 3727.56457026))
=0.135698 / 0.10493885
=1.2931

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)
=(4760.65952726 / 15971.7966718) / (4705.00066468 / 15636.9700559)
=0.29806662 / 0.30088954
=0.9906

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 + 5964.24923391) / 13395.4472494) / ((0 + 5582.17759441) / 12768.9682027)
=0.4452445 / 0.43716748
=1.0185

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
=(5154.22744057 - -523.655346255 - 5692.9285128) / 13395.4472494
=-0.0011

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 -2.33 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.96311.00851.01031.02861.07231.00051.07111.0238
GMI 0.99580.99820.9940.99420.99220.98370.98580.9832
AQI 1.40211.22531.33821.08911.2591.111.08551.2223
SGI 1.09671.06971.06381.04821.02031.01811.01811.0214
DEPI 00000.20110.42250.93991.2931
SGAI 0.98890.97320.96660.93450.94630.96320.960.9906
LVGI 1.01720.94311.11871.26931.29871.27271.07331.0185
TATA 0.02680.0177-0.0662-0.0628-0.067-0.0893-0.0518-0.0011
M-score -2.26-2.33-2.74-2.86-2.79-2.99-2.64-2.33
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