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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Beneish M-Score
-2.67 (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 -2.67 suggests that the company is not a manipulator.

TEVA' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -2.1
Current: -2.67

-2.89
-2.1

During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -2.10. The lowest was -2.89. And the median was -2.38.


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 * 0.9581+0.528 * 0.9947+0.404 * 1.0353+0.892 * 0.9999+0.115 * 1.0915
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0396+4.679 * -0.0382-0.327 * 0.9679
=-2.67

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $5,338 Mil.
Revenue was 5430 + 5059 + 4924 + 4901 = $20,314 Mil.
Gross Profit was 2894 + 2630 + 2593 + 2590 = $10,707 Mil.
Total Current Assets was $13,720 Mil.
Total Assets was $47,508 Mil.
Property, Plant and Equipment(Net PPE) was $6,635 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,429 Mil.
Selling, General & Admin. Expense(SGA) was $5,319 Mil.
Total Current Liabilities was $11,965 Mil.
Long-Term Debt was $10,387 Mil.
Net Income was 380 + 711 + -452 + 630 = $1,269 Mil.
Non Operating Income was 0 + -152 + 0 + 0 = $-152 Mil.
Cash Flow from Operations was 816 + 444 + 875 + 1102 = $3,237 Mil.
Accounts Receivable was $5,572 Mil.
Revenue was 5249 + 4972 + 4994 + 5102 = $20,317 Mil.
Gross Profit was 2785 + 2601 + 2657 + 2609 = $10,652 Mil.
Total Current Assets was $16,355 Mil.
Total Assets was $50,609 Mil.
Property, Plant and Equipment(Net PPE) was $6,315 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,611 Mil.
Selling, General & Admin. Expense(SGA) was $5,117 Mil.
Total Current Liabilities was $12,888 Mil.
Long-Term Debt was $11,712 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)
=(5338 / 20314) / (5572 / 20317)
=0.26277444 / 0.27425309
=0.9581

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)
=(2630 / 20317) / (2894 / 20314)
=0.52429 / 0.52707492
=0.9947

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 - (13720 + 6635) / 47508) / (1 - (16355 + 6315) / 50609)
=0.57154584 / 0.55205596
=1.0353

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
=20314 / 20317
=0.9999

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))
=(2611 / (2611 + 6315)) / (2429 / (2429 + 6635))
=0.29251624 / 0.26798323
=1.0915

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)
=(5319 / 20314) / (5117 / 20317)
=0.26183913 / 0.25185805
=1.0396

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)
=((10387 + 11965) / 47508) / ((11712 + 12888) / 50609)
=0.47048918 / 0.48607955
=0.9679

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
=(1269 - -152 - 3237) / 47508
=-0.0382

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 -2.67 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 own currency.

Teva Pharmaceutical Industries Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96021.06340.83691.08461.11370.86030.94070.99880.80830.9581
GMI 0.99360.98730.93290.97710.96291.01570.94261.08220.99110.9947
AQI 1.85860.78641.5330.90731.14610.96981.0881.04030.93071.0353
SGI 1.46471.0941.60151.11891.17831.25391.15991.13591.10950.9999
DEPI 0.91750.96190.92230.95711.45920.60541.06061.20210.71571.0731
SGAI 0.91411.04791.22851.08071.12111.11130.94451.01291.04581.0396
LVGI 0.90941.00611.0890.88061.14410.83491.01721.3181.01930.9679
TATA -0.0917-0.0289-0.0731-0.0007-0.0789-0.0413-0.0205-0.029-0.0509-0.0396
M-score -2.15-2.58-2.33-2.33-2.56-2.59-2.47-2.52-2.88-2.68

Teva Pharmaceutical Industries Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.97470.99880.92960.83710.84810.80830.85960.98040.9250.9581
GMI 1.05181.08221.08651.06351.02960.99110.97220.97990.98430.9947
AQI 0.93541.04031.0121.03211.03850.93070.97650.97421.00421.0353
SGI 1.09991.13591.16841.18611.21641.10951.04040.99650.97050.9999
DEPI 1.23471.20211.00840.8770.72570.52090.63160.69540.74751.0915
SGAI 1.01021.01290.99560.96321.01211.04581.08281.08221.06091.0396
LVGI 1.06551.3181.34411.33121.22491.01930.98421.03490.98760.9679
TATA -0.0184-0.029-0.0241-0.0162-0.0446-0.0487-0.0632-0.085-0.0551-0.0382
M-score -2.50-2.52-2.57-2.61-2.71-2.89-2.94-2.98-2.88-2.67
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