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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Beneish M-Score
-2.70 (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 -2.70 suggests that the company is not a manipulator.

TEVA' s 10-Year Beneish M-Score Range
Min: -2.87   Max: -2.08
Current: -2.7

-2.87
-2.08

During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -2.08. The lowest was -2.87. And the median was -2.49.


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 * 1.0152+0.528 * 0.9664+0.404 * 0.9607+0.892 * 0.9979+0.115 * 1.0581
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9567+4.679 * -0.0477-0.327 * 0.9549
=-2.70

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $5,408 Mil.
Revenue was 5168 + 5058 + 5045 + 5001 = $20,272 Mil.
Gross Profit was 2889 + 2809 + 2661 + 2697 = $11,056 Mil.
Total Current Assets was $14,396 Mil.
Total Assets was $46,420 Mil.
Property, Plant and Equipment(Net PPE) was $6,535 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,508 Mil.
Selling, General & Admin. Expense(SGA) was $5,078 Mil.
Total Current Liabilities was $12,289 Mil.
Long-Term Debt was $8,566 Mil.
Net Income was 687 + 876 + 748 + 744 = $3,055 Mil.
Non Operating Income was 473 + -168 + 0 + -162 = $143 Mil.
Cash Flow from Operations was 1752 + 1424 + 1053 + 898 = $5,127 Mil.
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 $1,642 Mil.
Selling, General & Admin. Expense(SGA) was $5,319 Mil.
Total Current Liabilities was $11,965 Mil.
Long-Term Debt was $10,387 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)
=(5408 / 20272) / (5338 / 20314)
=0.2667719 / 0.26277444
=1.0152

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)
=(2809 / 20314) / (2889 / 20272)
=0.52707492 / 0.54538279
=0.9664

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 - (14396 + 6535) / 46420) / (1 - (13720 + 6635) / 47508)
=0.54909522 / 0.57154584
=0.9607

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
=20272 / 20314
=0.9979

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))
=(1642 / (1642 + 6635)) / (1508 / (1508 + 6535))
=0.19838106 / 0.18749223
=1.0581

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)
=(5078 / 20272) / (5319 / 20314)
=0.25049329 / 0.26183913
=0.9567

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)
=((8566 + 12289) / 46420) / ((10387 + 11965) / 47508)
=0.44926756 / 0.47048918
=0.9549

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
=(3055 - 143 - 5127) / 46420
=-0.0477

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 -2.70 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.84810.80830.85960.98040.9250.95810.95970.99161.02181.0152
GMI 1.02960.99110.97220.97990.98430.99470.99780.99490.97720.9664
AQI 1.03850.93070.97650.97421.00421.03531.00330.99490.97770.9607
SGI 1.21641.10951.04040.99650.97050.99991.01481.02441.01990.9979
DEPI 0.72570.71570.89120.97871.05241.07311.26421.02271.01851.0581
SGAI 1.01211.04581.08281.08221.06091.03961.0090.98410.97210.9567
LVGI 1.22491.01930.98421.03490.98760.96790.99530.93680.94650.9549
TATA -0.0446-0.0487-0.0632-0.085-0.0551-0.0382-0.0285-0.0067-0.0239-0.0477
M-score -2.71-2.87-2.91-2.95-2.84-2.67-2.61-2.48-2.55-2.70
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