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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.
During the past 13 years, the highest Beneish M-Score of Pfizer Inc was -1.49. The lowest was -3.16. And the median was -2.51.
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 Pfizer Inc 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 * 0.9081||+||0.528 * 1.0116||+||0.404 * 1.0112||+||0.892 * 0.9639||+||0.115 * 1.1284|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.018||+||4.679 * -0.0398||-||0.327 * 1.0125|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $9,954 Mil.|
Revenue was 12361 + 12773 + 11353 + 13558 = $50,045 Mil.
Gross Profit was 9993 + 10311 + 9308 + 10764 = $40,376 Mil.
Total Current Assets was $56,987 Mil.
Total Assets was $171,362 Mil.
Property, Plant and Equipment(Net PPE) was $12,032 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,695 Mil.
Selling, General & Admin. Expense(SGA) was $14,268 Mil.
Total Current Liabilities was $19,920 Mil.
Long-Term Debt was $31,666 Mil.
Net Income was 2666 + 2912 + 2329 + 2568 = $10,475 Mil.
Non Operating Income was -1 + 0 + 0 + 0 = $-1 Mil.
Cash Flow from Operations was 4463 + 4087 + 2935 + 5805 = $17,290 Mil.
|Accounts Receivable was $11,371 Mil.
Revenue was 12643 + 12973 + 12410 + 13891 = $51,917 Mil.
Gross Profit was 10356 + 10731 + 10147 + 11138 = $42,372 Mil.
Total Current Assets was $59,500 Mil.
Total Assets was $175,521 Mil.
Property, Plant and Equipment(Net PPE) was $12,359 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,028 Mil.
Selling, General & Admin. Expense(SGA) was $14,540 Mil.
Total Current Liabilities was $20,373 Mil.
Long-Term Debt was $31,812 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(9954 / 50045)||/||(11371 / 51917)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(10311 / 51917)||/||(9993 / 50045)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (56987 + 12032) / 171362)||/||(1 - (59500 + 12359) / 175521)|
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.
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))|
|=||(7028 / (7028 + 12359))||/||(5695 / (5695 + 12032))|
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)|
|=||(14268 / 50045)||/||(14540 / 51917)|
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)|
|=||((31666 + 19920) / 171362)||/||((31812 + 20373) / 175521)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(10475 - -1||-||17290)||/||171362|
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.
Pfizer Inc has a M-score of -2.76 suggests that the company will not be a manipulator.
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
Pfizer Inc Annual Data
Pfizer Inc Quarterly Data