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GuruFocus has detected 4 Warning Signs with Pfizer Inc $PFE.
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Pfizer Inc (NYSE:PFE)
Beneish M-Score
-2.55 (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.

Pfizer Inc has a M-score of -2.55 suggests that the company is not a manipulator.

PFE' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -1.58
Current: -2.55

-3.08
-1.58

During the past 13 years, the highest Beneish M-Score of Pfizer Inc was -1.58. The lowest was -3.08. And the median was -2.57.


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 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 * 0.9303+0.528 * 1.0468+0.404 * 1.06+0.892 * 1.0813+0.115 * 0.903
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9266+4.679 * -0.0234-0.327 * 1.0487
=-2.55

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $8,225 Mil.
Revenue was 13628 + 13045 + 13147 + 13005 = $52,825 Mil.
Gross Profit was 10410 + 9960 + 9973 + 10154 = $40,497 Mil.
Total Current Assets was $38,949 Mil.
Total Assets was $171,615 Mil.
Property, Plant and Equipment(Net PPE) was $13,318 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,757 Mil.
Selling, General & Admin. Expense(SGA) was $14,838 Mil.
Total Current Liabilities was $31,115 Mil.
Long-Term Debt was $31,398 Mil.
Net Income was 860 + 1320 + 2019 + 3016 = $7,215 Mil.
Non Operating Income was -1393 + -1780 + -1213 + -278 = $-4,664 Mil.
Cash Flow from Operations was 5972 + 4699 + 3579 + 1651 = $15,901 Mil.
Accounts Receivable was $8,176 Mil.
Revenue was 14047 + 12087 + 11853 + 10864 = $48,851 Mil.
Gross Profit was 10637 + 9868 + 9673 + 9026 = $39,204 Mil.
Total Current Assets was $43,804 Mil.
Total Assets was $167,381 Mil.
Property, Plant and Equipment(Net PPE) was $13,766 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,157 Mil.
Selling, General & Admin. Expense(SGA) was $14,808 Mil.
Total Current Liabilities was $29,399 Mil.
Long-Term Debt was $28,740 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)
=(8225 / 52825) / (8176 / 48851)
=0.15570279 / 0.16736607
=0.9303

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)
=(39204 / 48851) / (40497 / 52825)
=0.80252195 / 0.76662565
=1.0468

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 - (38949 + 13318) / 171615) / (1 - (43804 + 13766) / 167381)
=0.69544038 / 0.65605415
=1.06

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
=52825 / 48851
=1.0813

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))
=(5157 / (5157 + 13766)) / (5757 / (5757 + 13318))
=0.2725255 / 0.30180865
=0.903

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)
=(14838 / 52825) / (14808 / 48851)
=0.28088973 / 0.30312583
=0.9266

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)
=((31398 + 31115) / 171615) / ((28740 + 29399) / 167381)
=0.36426303 / 0.34734528
=1.0487

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
=(7215 - -4664 - 15901) / 171615
=-0.0234

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 -2.55 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 local exchange's currency.

Pfizer Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0470.91241.57890.76570.95410.91290.92880.93360.98820.9303
GMI 1.09660.92291.01191.06360.97220.96941.00761.0091.00551.0468
AQI 1.03041.07841.22420.98080.99990.97991.03660.99481.0971.06
SGI 1.0010.99751.03551.30310.93660.89550.94380.96160.98481.0813
DEPI 0.97190.89681.60330.56610.84350.98631.07631.06481.17450.903
SGAI 1.00140.93270.98820.97880.98930.96361.00261.02121.06670.9265
LVGI 1.05691.24421.20020.910.9880.95460.9651.01371.09551.0487
TATA -0.0509-0.0842-0.0396-0.0236-0.05440.00380.0161-0.0455-0.0266-0.0234
M-score -2.63-3.05-2.00-2.53-2.86-2.64-2.48-2.79-2.61-2.55

Pfizer Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90810.93360.97630.89981.00030.98820.97540.9410.92850.9303
GMI 1.01161.0091.00660.99760.99181.00551.02311.04421.06361.0468
AQI 1.01120.99481.04851.02661.09921.0971.06881.09191.08121.06
SGI 0.96390.96160.97210.95770.95760.98481.03821.08491.11111.0813
DEPI 1.12841.06481.04341.05411.19011.17451.12481.07330.90670.903
SGAI 1.0181.02121.02751.03831.00571.06661.02630.99721.01280.9266
LVGI 1.01251.01371.01151.0071.10671.09551.12451.15921.09681.0487
TATA -0.0432-0.0461-0.035-0.0369-0.0339-0.0265-0.0264-0.0185-0.0166-0.0234
M-score -2.78-2.79-2.67-2.78-2.65-2.61-2.58-2.53-2.50-2.55
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