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GuruFocus has detected 3 Warning Signs with Sanofi SA $SNY.
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Sanofi SA (NYSE:SNY)
Beneish M-Score
-2.64 (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.

Sanofi SA has a M-score of -2.67 suggests that the company is not a manipulator.

SNY' s Beneish M-Score Range Over the Past 10 Years
Min: -2.74   Max: 0.89
Current: -2.64

-2.74
0.89

During the past 13 years, the highest Beneish M-Score of Sanofi SA was 0.89. The lowest was -2.74. And the median was -2.58.


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 Sanofi SA 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 * 0.9942+0.528 * 0.993+0.404 * 0.985+0.892 * 0.9641+0.115 * 1.2135
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0507+4.679 * -0.0282-0.327 * 1.0855
=-2.67

* 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 $7,712 Mil.
Revenue was $36,612 Mil.
Gross Profit was $25,323 Mil.
Total Current Assets was $28,151 Mil.
Total Assets was $110,414 Mil.
Property, Plant and Equipment(Net PPE) was $10,569 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,482 Mil.
Selling, General & Admin. Expense(SGA) was $10,692 Mil.
Total Current Liabilities was $17,335 Mil.
Long-Term Debt was $17,737 Mil.
Net Income was $4,967 Mil.
Non Operating Income was $-553 Mil.
Cash Flow from Operations was $8,633 Mil.
Accounts Receivable was $8,046 Mil.
Revenue was $37,975 Mil.
Gross Profit was $26,081 Mil.
Total Current Assets was $27,155 Mil.
Total Assets was $111,461 Mil.
Property, Plant and Equipment(Net PPE) was $10,831 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,658 Mil.
Selling, General & Admin. Expense(SGA) was $10,554 Mil.
Total Current Liabilities was $18,328 Mil.
Long-Term Debt was $14,290 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)
=(7712.02531646 / 36611.814346) / (8045.75163399 / 37974.9455338)
=0.21064308 / 0.21187
=0.9942

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)
=(26080.6100218 / 37974.9455338) / (25322.7848101 / 36611.814346)
=0.68678466 / 0.6916561
=0.993

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 - (28150.8438819 + 10568.5654008) / 110413.50211) / (1 - (27154.6840959 + 10831.1546841) / 111460.784314)
=0.6493236 / 0.65919997
=0.985

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
=36611.814346 / 37974.9455338
=0.9641

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))
=(4657.95206972 / (4657.95206972 + 10831.1546841)) / (3482.06751055 / (3482.06751055 + 10568.5654008))
=0.30072438 / 0.24782282
=1.2135

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)
=(10691.9831224 / 36611.814346) / (10554.4662309 / 37974.9455338)
=0.29203642 / 0.27793236
=1.0507

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)
=((17737.3417722 + 17335.443038) / 110413.50211) / ((14289.7603486 + 18327.8867102) / 111460.784314)
=0.31764942 / 0.29263787
=1.0855

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
=(4967.29957806 - -552.742616034 - 8632.91139241) / 110413.50211
=-0.0282

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.

Sanofi SA has a M-score of -2.67 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.

Sanofi SA Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9841.0961.0630.97731.19990.91011.04561.02340.94830.9942
GMI 1.00260.99381.00221.02741.0490.99821.03070.9860.99060.993
AQI 0.96190.93850.99220.97851.0260.97210.96611.01211.00990.985
SGI 1.09130.9161.1511.00441.02461.0230.90840.92050.96250.9641
DEPI 1.19060.90061.18471.01071.13361.07490.95021.39060.79751.2135
SGAI 0.9510.96170.95771.00511.01361.02351.02291.06771.02461.0507
LVGI 0.98081.00761.12320.93321.31530.94451.03651.06591.08331.0855
TATA -0.0256-0.0649-0.0405-0.0515-0.0365-0.0327-0.0337-0.0341-0.0453-0.0282
M-score -2.51-2.81-2.49-2.71-2.50-2.68-2.70-2.68-2.83-2.67
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