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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 -2.96 suggests that the company is not a manipulator.

TEVA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.11   Max: -1.6
Current: -2.67

-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 * 1.0041+0.528 * 0.9423+0.404 * 1.0894+0.892 * 0.971+0.115 * 1.1213
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9578+4.679 * -0.1008-0.327 * 1.0524
=-2.96

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $5,275 Mil.
Revenue was 4823 + 4966 + 4982 + 5168 = $19,939 Mil.
Gross Profit was 2771 + 2902 + 2836 + 2889 = $11,398 Mil.
Total Current Assets was $12,500 Mil.
Total Assets was $48,625 Mil.
Property, Plant and Equipment(Net PPE) was $6,422 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,342 Mil.
Selling, General & Admin. Expense(SGA) was $4,836 Mil.
Total Current Liabilities was $12,978 Mil.
Long-Term Debt was $9,516 Mil.
Net Income was 103 + 539 + 446 + 687 = $1,775 Mil.
Non Operating Income was -2404 + -82 + 0 + 3482 = $996 Mil.
Cash Flow from Operations was 1093 + 1480 + 1354 + 1752 = $5,679 Mil.
Accounts Receivable was $5,410 Mil.
Revenue was 5058 + 5045 + 5001 + 5430 = $20,534 Mil.
Gross Profit was 2809 + 2661 + 2697 + 2894 = $11,061 Mil.
Total Current Assets was $13,922 Mil.
Total Assets was $46,608 Mil.
Property, Plant and Equipment(Net PPE) was $6,551 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,575 Mil.
Selling, General & Admin. Expense(SGA) was $5,200 Mil.
Total Current Liabilities was $11,669 Mil.
Long-Term Debt was $8,818 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)
=(5275 / 19939) / (5410 / 20534)
=0.2645569 / 0.26346547
=1.0041

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)
=(2902 / 20534) / (2771 / 19939)
=0.53866758 / 0.57164351
=0.9423

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 - (12500 + 6422) / 48625) / (1 - (13922 + 6551) / 46608)
=0.61085861 / 0.56074065
=1.0894

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
=19939 / 20534
=0.971

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))
=(1575 / (1575 + 6551)) / (1342 / (1342 + 6422))
=0.1938223 / 0.17284905
=1.1213

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)
=(4836 / 19939) / (5200 / 20534)
=0.24253975 / 0.25323853
=0.9578

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)
=((9516 + 12978) / 48625) / ((8818 + 11669) / 46608)
=0.46260154 / 0.43955973
=1.0524

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
=(1775 - 996 - 5679) / 48625
=-0.1008

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 -2.96 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 0.78641.5330.90731.14610.96981.0881.04030.93071.03530.9607
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 1.00611.0890.88061.14410.83491.01721.3181.01930.96790.9549
TATA -0.0289-0.0731-0.0007-0.0789-0.0413-0.0205-0.029-0.0509-0.0396-0.0444
M-score -2.55-2.15-2.33-2.56-2.59-2.47-2.52-2.88-2.68-2.68

Teva Pharmaceutical Industries Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.98040.9250.95810.95970.99161.02181.01521.05251.05171.0041
GMI 0.97990.98430.99470.99780.99490.97720.96640.95830.93480.9423
AQI 0.97421.00421.03531.00330.99490.97770.96070.92831.07381.0894
SGI 0.99650.97050.99991.01481.02441.01990.99790.99210.98240.971
DEPI 0.97871.05241.07311.26421.02271.01851.05810.82561.10221.1213
SGAI 1.08221.06091.03961.0090.98410.97210.95670.95430.97070.9578
LVGI 1.03490.98760.96790.99530.93680.94650.95491.00851.06021.0524
TATA -0.085-0.0551-0.0382-0.0285-0.00340.0033-0.0852-0.1038-0.1108-0.1008
M-score -2.95-2.84-2.67-2.61-2.46-2.42-2.87-2.99-2.97-2.96
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