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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 -2.57.
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 * 0.9754||+||0.528 * 1.0231||+||0.404 * 1.0688||+||0.892 * 1.0382||+||0.115 * 1.1248|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0263||+||4.679 * -0.0313||-||0.327 * 1.1245|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $9,033 Mil.|
Revenue was 13005 + 14047 + 12087 + 11853 = $50,992 Mil.
Gross Profit was 10154 + 10637 + 9868 + 9673 = $40,332 Mil.
Total Current Assets was $41,298 Mil.
Total Assets was $162,929 Mil.
Property, Plant and Equipment(Net PPE) was $13,584 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,322 Mil.
Selling, General & Admin. Expense(SGA) was $15,089 Mil.
Total Current Liabilities was $28,735 Mil.
Long-Term Debt was $27,824 Mil.
Net Income was 3016 + -172 + 2130 + 2626 = $7,600 Mil.
Non Operating Income was -278 + -1994 + -504 + 0 = $-2,776 Mil.
Cash Flow from Operations was 1651 + 4713 + 5024 + 4095 = $15,483 Mil.
|Accounts Receivable was $8,920 Mil.
Revenue was 10864 + 13118 + 12361 + 12773 = $49,116 Mil.
Gross Profit was 9026 + 10416 + 9993 + 10311 = $39,746 Mil.
Total Current Assets was $49,443 Mil.
Total Assets was $160,640 Mil.
Property, Plant and Equipment(Net PPE) was $11,527 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,341 Mil.
Selling, General & Admin. Expense(SGA) was $14,161 Mil.
Total Current Liabilities was $20,222 Mil.
Long-Term Debt was $29,370 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)|
|=||(9033 / 50992)||/||(8920 / 49116)|
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)|
|=||(10637 / 49116)||/||(10154 / 50992)|
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 - (41298 + 13584) / 162929)||/||(1 - (49443 + 11527) / 160640)|
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))|
|=||(5341 / (5341 + 11527))||/||(5322 / (5322 + 13584))|
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)|
|=||(15089 / 50992)||/||(14161 / 49116)|
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)|
|=||((27824 + 28735) / 162929)||/||((29370 + 20222) / 160640)|
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|
|=||(7600 - -2776||-||15483)||/||162929|
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 -2.61 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