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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.60 (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 -2.63 suggests that the company is not a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -2.07
Current: -2.6

-3.35
-2.07

During the past 13 years, the highest Beneish M-Score of Novo Nordisk A/S was -2.07. The lowest was -3.35. And the median was -2.75.


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 * 1.0103+0.528 * 0.994+0.404 * 1.3382+0.892 * 1.0638+0.115 * 0.9286
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9666+4.679 * -0.0662-0.327 * 1.1187
=-2.63

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,872 Mil.
Revenue was 3852.17376249 + 3942.50925065 + 3768.61800667 + 3987.13708196 = $15,550 Mil.
Gross Profit was 3258.99890922 + 3273.36359162 + 3126.52834383 + 3362.36677692 = $13,021 Mil.
Total Current Assets was $7,128 Mil.
Total Assets was $12,342 Mil.
Property, Plant and Equipment(Net PPE) was $3,915 Mil.
Depreciation, Depletion and Amortization(DDA) was $514 Mil.
Selling, General & Admin. Expense(SGA) was $4,810 Mil.
Total Current Liabilities was $5,200 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1125.40471285 + 1274.85827819 + 1196.36902557 + 1112.27489893 = $4,709 Mil.
Non Operating Income was 0 + 0 + 0 + 192.024990812 = $192 Mil.
Cash Flow from Operations was 2111.77865886 + 1481.01565775 + 753.797702853 + 987.137081955 = $5,334 Mil.
Accounts Receivable was $1,742 Mil.
Revenue was 3675.14782297 + 3783.40116793 + 3472.28496959 + 3686.59866338 = $14,617 Mil.
Gross Profit was 3043.54058412 + 3145.28402053 + 2845.17810599 + 3132.07879001 = $12,166 Mil.
Total Current Assets was $7,330 Mil.
Total Assets was $12,208 Mil.
Property, Plant and Equipment(Net PPE) was $3,919 Mil.
Depreciation, Depletion and Amortization(DDA) was $474 Mil.
Selling, General & Admin. Expense(SGA) was $4,678 Mil.
Total Current Liabilities was $4,598 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)
=(1872.15402462 / 15550.4381018) / (1741.80254435 / 14617.4326239)
=0.12039237 / 0.11915927
=1.0103

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)
=(3273.36359162 / 14617.4326239) / (3258.99890922 / 15550.4381018)
=0.83229948 / 0.83735632
=0.994

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 - (7128.31345118 + 3915.02328722) / 12341.8806378) / (1 - (7329.69001971 + 3918.65257122) / 12208.2064146)
=0.10521443 / 0.07862448
=1.3382

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
=15550.4381018 / 14617.4326239
=1.0638

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))
=(473.61941611 / (473.61941611 + 3918.65257122)) / (514.332965821 / (514.332965821 + 3915.02328722))
=0.10783017 / 0.11611912
=0.9286

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)
=(4810.15297131 / 15550.4381018) / (4677.93912473 / 14617.4326239)
=0.30932588 / 0.32002467
=0.9666

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 + 5199.54291255) / 12341.8806378) / ((0 + 4597.56316072) / 12208.2064146)
=0.42129259 / 0.37659612
=1.1187

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
=(4708.90691554 - 192.024990812 - 5333.72910143) / 12341.8806378
=-0.0662

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 -2.63 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 0.97441.01480.93911.09280.99160.95741.01141.00750.87671.0565
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 1.19931.01761.27961.19091.01121.21011.07781.08881.1691.1191
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 -2.53-2.91-2.31-2.61-2.97-2.76-2.90-2.70-2.52-2.26

Novo Nordisk A/S Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.62880.68990.70680.97361.02660.93011.07420.96311.00851.0103
GMI 0.9910.98150.98220.97810.98150.98670.99570.99580.99820.994
AQI 1.15321.40710.93591.14271.43481.18991.50551.40211.22531.3382
SGI 1.46081.45231.451.10971.1321.11811.10061.09671.06971.0638
DEPI 0.46150.271.04061.04731.09351.07710.980.98640.97040.9286
SGAI 0.9450.93870.93730.95340.97841.00251.01020.98890.97320.9666
LVGI 1.28641.19291.00171.11620.990.93861.04531.01720.94311.1187
TATA -0.1012-0.0654-0.0078-0.01060.00810.0405-0.02460.02680.0177-0.0662
M-score -2.97-2.65-2.41-2.43-2.12-2.15-2.25-2.15-2.22-2.63
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