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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Beneish M-Score
-2.77 (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.

Teva Pharmaceutical Industries Ltd has a M-score of -2.77 suggests that the company is not a manipulator.

TEVA' s 10-Year Beneish M-Score Range
Min: -3.11   Max: -1.6
Current: -2.77

-3.11
-1.6

During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -1.60. The lowest was -3.11. And the median was -2.50.


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 Teva Pharmaceutical Industries Ltd 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 * 1.0517+0.528 * 0.9348+0.404 * 1.0738+0.892 * 0.9824+0.115 * 1.3114
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9707+4.679 * -0.0732-0.327 * 1.0602
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $5,568 Mil.
Revenue was 4966 + 4982 + 5168 + 5058 = $20,174 Mil.
Gross Profit was 2902 + 2836 + 2889 + 2809 = $11,436 Mil.
Total Current Assets was $13,299 Mil.
Total Assets was $50,371 Mil.
Property, Plant and Equipment(Net PPE) was $6,427 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,388 Mil.
Selling, General & Admin. Expense(SGA) was $4,983 Mil.
Total Current Liabilities was $14,473 Mil.
Long-Term Debt was $9,496 Mil.
Net Income was 539 + 446 + 687 + 876 = $2,548 Mil.
Non Operating Income was -82 + 0 + 473 + -168 = $223 Mil.
Cash Flow from Operations was 1480 + 1354 + 1752 + 1424 = $6,010 Mil.
Accounts Receivable was $5,389 Mil.
Revenue was 5045 + 5001 + 5430 + 5059 = $20,535 Mil.
Gross Profit was 2661 + 2697 + 2894 + 2630 = $10,882 Mil.
Total Current Assets was $13,546 Mil.
Total Assets was $46,734 Mil.
Property, Plant and Equipment(Net PPE) was $6,709 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,037 Mil.
Selling, General & Admin. Expense(SGA) was $5,225 Mil.
Total Current Liabilities was $11,854 Mil.
Long-Term Debt was $9,122 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)
=(5568 / 20174) / (5389 / 20535)
=0.27599881 / 0.26243
=1.0517

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)
=(2836 / 20535) / (2902 / 20174)
=0.52992452 / 0.56686825
=0.9348

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 - (13299 + 6427) / 50371) / (1 - (13546 + 6709) / 46734)
=0.60838578 / 0.56658963
=1.0738

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
=20174 / 20535
=0.9824

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))
=(2037 / (2037 + 6709)) / (1388 / (1388 + 6427))
=0.23290647 / 0.17760717
=1.3114

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)
=(4983 / 20174) / (5225 / 20535)
=0.24700109 / 0.25444363
=0.9707

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)
=((9496 + 14473) / 50371) / ((9122 + 11854) / 46734)
=0.4758492 / 0.44883811
=1.0602

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
=(2548 - 223 - 6010) / 50371
=-0.0732

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.

Teva Pharmaceutical Industries Ltd has a M-score of -2.77 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 own currency.

Teva Pharmaceutical Industries Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.09561.03141.08461.11370.86030.94070.99880.80830.95811.0152
GMI 0.98730.93290.97710.96291.01570.94261.08220.99110.99470.9664
AQI 0.78641.5330.90731.14610.981.07681.04030.93071.03530.9607
SGI 1.0941.60151.11891.17831.25391.15991.13591.10950.99990.9979
DEPI 0.96190.92230.95711.45920.60541.06061.20210.71571.07311.0581
SGAI 1.04791.22851.08071.12111.11130.94451.01291.04581.03960.9567
LVGI 1.00611.0890.88061.14410.82711.02691.32751.0120.96790.9549
TATA -0.0289-0.0731-0.0007-0.0789-0.0414-0.0211-0.0274-0.0509-0.0396-0.0444
M-score -2.55-2.15-2.33-2.56-2.58-2.48-2.51-2.87-2.68-2.68

Teva Pharmaceutical Industries Ltd Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.85960.98040.9250.95810.95970.99161.02181.01521.05251.0517
GMI 0.97220.97990.98430.99470.99780.99490.97720.96640.95830.9348
AQI 0.97650.97421.00421.03531.00330.99490.97770.96070.92831.0738
SGI 1.04040.99650.97050.99991.01481.02441.01990.99790.99210.9824
DEPI 0.89120.97871.05241.07311.00520.85960.85090.87641.03841.3114
SGAI 1.08281.08221.06091.03961.0090.98410.97210.95670.95430.9707
LVGI 0.98421.03490.98760.96790.99530.93680.94650.95491.00851.0602
TATA -0.0662-0.0881-0.0551-0.0382-0.0285-0.0034-0.0205-0.0444-0.0634-0.0732
M-score -2.93-2.96-2.84-2.67-2.64-2.48-2.55-2.70-2.78-2.77
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