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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 -2.56.
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 * 0.8998||+||0.528 * 0.9976||+||0.404 * 1.0266||+||0.892 * 0.9577||+||0.115 * 1.0541|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0383||+||4.679 * -0.0357||-||0.327 * 1.007|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $8,951 Mil.|
Revenue was 11853 + 10864 + 13118 + 12361 = $48,196 Mil.
Gross Profit was 9673 + 9026 + 10416 + 9993 = $39,108 Mil.
Total Current Assets was $51,715 Mil.
Total Assets was $160,878 Mil.
Property, Plant and Equipment(Net PPE) was $11,432 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,118 Mil.
Selling, General & Admin. Expense(SGA) was $14,027 Mil.
Total Current Liabilities was $24,143 Mil.
Long-Term Debt was $26,729 Mil.
Net Income was 2626 + 2376 + 1228 + 2666 = $8,896 Mil.
Non Operating Income was 0 + 0 + 0 + -1 = $-1 Mil.
Cash Flow from Operations was 4090 + 685 + 5398 + 4463 = $14,636 Mil.
|Accounts Receivable was $10,388 Mil.
Revenue was 12773 + 11353 + 13558 + 12643 = $50,327 Mil.
Gross Profit was 10311 + 9308 + 10764 + 10356 = $40,739 Mil.
Total Current Assets was $58,287 Mil.
Total Assets was $172,612 Mil.
Property, Plant and Equipment(Net PPE) was $12,179 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,890 Mil.
Selling, General & Admin. Expense(SGA) was $14,107 Mil.
Total Current Liabilities was $21,938 Mil.
Long-Term Debt was $32,267 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)|
|=||(8951 / 48196)||/||(10388 / 50327)|
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)|
|=||(9026 / 50327)||/||(9673 / 48196)|
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 - (51715 + 11432) / 160878)||/||(1 - (58287 + 12179) / 172612)|
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))|
|=||(5890 / (5890 + 12179))||/||(5118 / (5118 + 11432))|
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)|
|=||(14027 / 48196)||/||(14107 / 50327)|
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)|
|=||((26729 + 24143) / 160878)||/||((32267 + 21938) / 172612)|
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|
|=||(8896 - -1||-||14636)||/||160878|
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 -2.77 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