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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.
Teva Pharmaceutical Industries Ltd has a M-score of -2.48 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -1.71. The lowest was -3.11. And the median was -2.53.
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 * 0.9916||+||0.528 * 0.9949||+||0.404 * 0.9949||+||0.892 * 1.0244||+||0.115 * 1.0227|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9841||+||4.679 * -0.0067||-||0.327 * 0.9368|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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 $1,633 Mil.
Selling, General & Admin. Expense(SGA) was $5,225 Mil.
Total Current Liabilities was $11,854 Mil.
Long-Term Debt was $9,122 Mil.
Net Income was 748 + 744 + 380 + 711 = $2,583 Mil.
Non Operating Income was 0 + -162 + 0 + -152 = $-314 Mil.
Cash Flow from Operations was 1053 + 898 + 816 + 444 = $3,211 Mil.
|Accounts Receivable was $5,305 Mil.
Revenue was 4924 + 4901 + 5249 + 4972 = $20,046 Mil.
Gross Profit was 2593 + 2590 + 2785 + 2601 = $10,569 Mil.
Total Current Assets was $14,091 Mil.
Total Assets was $47,503 Mil.
Property, Plant and Equipment(Net PPE) was $6,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,592 Mil.
Selling, General & Admin. Expense(SGA) was $5,183 Mil.
Total Current Liabilities was $12,835 Mil.
Long-Term Debt was $9,925 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)|
|=||(5389 / 20535)||/||(5305 / 20046)|
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)|
|=||(2697 / 20046)||/||(2661 / 20535)|
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 - (13546 + 6709) / 46734)||/||(1 - (14091 + 6360) / 47503)|
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))|
|=||(1592 / (1592 + 6360))||/||(1633 / (1633 + 6709))|
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)|
|=||(5225 / 20535)||/||(5183 / 20046)|
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)|
|=||((9122 + 11854) / 46734)||/||((9925 + 12835) / 47503)|
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|
|=||(2583 - -314||-||3211)||/||46734|
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 -2.48 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
Teva Pharmaceutical Industries Ltd Annual Data
Teva Pharmaceutical Industries Ltd Quarterly Data