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Novo Nordisk A/S (NYSE:NVO)
Beneish M-Score
-2.37 (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 -2.72 suggests that the company is not a manipulator.

NVO' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -2.07
Current: -2.37

-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 -2.72.


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 * 1.0723+0.528 * 0.9922+0.404 * 1.259+0.892 * 1.0203+0.115 * 0.8285
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9463+4.679 * -0.067-0.327 * 1.2987
=-2.72

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $2,124 Mil.
Revenue was 3654.61031992 + 4073.66903614 + 3852.17376249 + 3942.50925065 = $15,523 Mil.
Gross Profit was 3092.78649534 + 3411.0453845 + 3258.99890922 + 3273.36359162 = $13,036 Mil.
Total Current Assets was $6,303 Mil.
Total Assets was $11,233 Mil.
Property, Plant and Equipment(Net PPE) was $3,403 Mil.
Depreciation, Depletion and Amortization(DDA) was $665 Mil.
Selling, General & Admin. Expense(SGA) was $4,629 Mil.
Total Current Liabilities was $6,089 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1432.25918728 + 1081.83791486 + 1125.40471285 + 1274.85827819 = $4,914 Mil.
Non Operating Income was 344.57754445 + -75.8893804577 + 0 + 0 = $269 Mil.
Cash Flow from Operations was 595.469443397 + 1209.75625922 + 2111.77865886 + 1481.01565775 = $5,398 Mil.
Accounts Receivable was $1,942 Mil.
Revenue was 3768.61800667 + 3987.13708196 + 3675.14782297 + 3783.40116793 = $15,214 Mil.
Gross Profit was 3126.52834383 + 3362.36677692 + 3043.54058412 + 3145.28402053 = $12,678 Mil.
Total Current Assets was $6,392 Mil.
Total Assets was $11,716 Mil.
Property, Plant and Equipment(Net PPE) was $4,058 Mil.
Depreciation, Depletion and Amortization(DDA) was $636 Mil.
Selling, General & Admin. Expense(SGA) was $4,795 Mil.
Total Current Liabilities was $4,890 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)
=(2124.31476057 / 15522.9623692) / (1941.64505372 / 15214.3040795)
=0.13684983 / 0.12761971
=1.0723

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)
=(3411.0453845 / 15214.3040795) / (3092.78649534 / 15522.9623692)
=0.83327635 / 0.83980068
=0.9922

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 - (6302.8975839 + 3402.84827566) / 11233.1409345) / (1 - (6392.36754353 + 4057.98443868) / 11715.6354205)
=0.13597222 / 0.10799956
=1.259

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
=15522.9623692 / 15214.3040795
=1.0203

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))
=(636.044710912 / (636.044710912 + 4057.98443868)) / (665.321410659 / (665.321410659 + 3402.84827566))
=0.1355008 / 0.16354318
=0.8285

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)
=(4628.98509994 / 15522.9623692) / (4794.54801973 / 15214.3040795)
=0.29820243 / 0.31513423
=0.9463

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 + 6089.42193346) / 11233.1409345) / ((0 + 4890.14449796) / 11715.6354205)
=0.54209432 / 0.41740327
=1.2987

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
=(4914.36009319 - 268.688163992 - 5398.02001923) / 11233.1409345
=-0.067

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 -2.72 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.01480.93911.09280.99160.95741.01141.00750.87671.05651.1252
GMI 0.99260.96750.98260.98430.97790.98490.9970.97920.99590.9938
AQI 1.03091.33911.02240.71450.90921.12681.10030.93591.50551.0891
SGI 1.01761.27961.19091.01121.21011.07781.08881.1691.11910.9582
DEPI 1.10090.92760.71571.14750.98961.09090.92861.04060.980.8772
SGAI 0.99341.03240.98460.97431.02750.98260.95870.94991.010.9366
LVGI 1.24640.89940.95861.1330.9541.17631.06411.00171.04531.2693
TATA -0.085-0.0343-0.0798-0.0736-0.0832-0.1057-0.0698-0.0119-0.0256-0.0617
M-score -2.91-2.31-2.61-2.97-2.76-2.90-2.70-2.52-2.26-2.75

Novo Nordisk A/S Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.70680.97361.02660.93011.07420.96311.00851.01031.02861.0723
GMI 0.98220.97810.98150.98670.99570.99580.99820.9940.99420.9922
AQI 0.93591.14271.43481.18991.50551.40211.22531.33821.08911.259
SGI 1.451.10971.1321.11811.10061.09671.06971.06381.04821.0203
DEPI 1.04061.04731.09351.07710.980.81890.80560.77160.74270.8285
SGAI 0.93730.95340.97841.00251.01020.98890.97320.96660.93450.9463
LVGI 1.00171.11620.990.93861.04531.01720.94311.11871.26931.2987
TATA -0.0078-0.01060.00810.0405-0.02460.02680.0177-0.0662-0.0628-0.067
M-score -2.41-2.43-2.12-2.15-2.25-2.17-2.24-2.65-2.78-2.72
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