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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-1.98 (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 -1.92 signals that the company is a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.66   Max: -1.98
Current: -1.98

-3.66
-1.98

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -1.98. The lowest was -3.66. 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 * 1.2119+0.528 * 0.9959+0.404 * 1.4021+0.892 * 1.0961+0.115 * 0.9984
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9883+4.679 * 0.027-0.327 * 1.0172
=-1.92

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $3,348 Mil.
Revenue was 3763.04106548 + 3960.21171747 + 3752.46981339 + 3752.19375219 = $15,228 Mil.
Gross Profit was 3121.90159083 + 3339.66052199 + 3107.5740944 + 3119.34011934 = $12,688 Mil.
Total Current Assets was $6,383 Mil.
Total Assets was $11,698 Mil.
Property, Plant and Equipment(Net PPE) was $4,052 Mil.
Depreciation, Depletion and Amortization(DDA) was $511 Mil.
Selling, General & Admin. Expense(SGA) was $4,798 Mil.
Total Current Liabilities was $4,883 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1194.59859415 + 1104.763643 + 1173.61873399 + 1181.81818182 = $4,655 Mil.
Non Operating Income was 0 + 190.728235079 + 0 + 0 = $191 Mil.
Cash Flow from Operations was 752.682204957 + 980.470888848 + 1137.39480424 + 1278.16777817 = $4,149 Mil.
Accounts Receivable was $2,520 Mil.
Revenue was 3491.09014675 + 3737.20805848 + 3451.90467907 + 3213.07146394 = $13,893 Mil.
Gross Profit was 2860.5870021 + 3175.07577108 + 2845.71229779 + 2647.96170985 = $11,529 Mil.
Total Current Assets was $6,254 Mil.
Total Assets was $10,910 Mil.
Property, Plant and Equipment(Net PPE) was $3,815 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $4,429 Mil.
Total Current Liabilities was $4,477 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)
=(3347.57676656 / 15227.9163485) / (2520.09084556 / 13893.2743482)
=0.21983157 / 0.18138927
=1.2119

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)
=(3339.66052199 / 13893.2743482) / (3121.90159083 / 15227.9163485)
=0.82985022 / 0.83323785
=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 - (6382.90788013 + 4051.97928228) / 11698.2981872) / (1 - (6254.19287212 + 3815.16422082) / 10909.6785465)
=0.10799956 / 0.07702532
=1.4021

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
=15227.9163485 / 13893.2743482
=1.0961

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 + 3815.16422082)) / (510.859645921 / (510.859645921 + 4051.97928228))
=0.11177866 / 0.11196092
=0.9984

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)
=(4797.79207673 / 15227.9163485) / (4428.92286876 / 13893.2743482)
=0.31506557 / 0.31878179
=0.9883

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 + 4882.90788013) / 11698.2981872) / ((0 + 4476.93920335) / 10909.6785465)
=0.41740327 / 0.41036399
=1.0172

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
=(4654.79915297 - 190.728235079 - 4148.71567622) / 11698.2981872
=0.027

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 -1.92 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 0.94861.16110.92361.04111.09430.80570.97811.26220.91611.0429
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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.57150.86080.84830.95260.75640.94750.97761.131.03551.2119
GMI 0.99420.99710.99120.98150.9820.97790.98140.98670.99590.9959
AQI 1.10031.1991.15321.40710.93591.14271.43481.18991.50551.4021
SGI 0.84871.46841.4161.43831.46281.12061.15021.13761.10441.0961
DEPI 0.92920.69230.4790.27941.04061.02621.07541.060.980.9984
SGAI 0.99660.98130.94470.93830.93780.95390.97861.00291.00950.9883
LVGI 1.06411.15651.28641.19291.00171.11620.990.93861.04531.0172
TATA -0.146-0.0751-0.1029-0.0647-0.0064-0.00930.00890.0406-0.02470.027
M-score -2.76-2.55-2.82-2.42-2.34-2.45-2.14-1.95-2.29-1.92
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