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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

TEVA' s 10-Year Beneish M-Score Range
Min: -3.11   Max: -1.71
Current: -2.57

-3.11
-1.71

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 -2.49.


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 * 1.0218+0.528 * 0.9772+0.404 * 0.9777+0.892 * 1.0199+0.115 * 0.8509
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9721+4.679 * -0.0239-0.327 * 0.9465
=-2.57

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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 $1,979 Mil.
Selling, General & Admin. Expense(SGA) was $5,200 Mil.
Total Current Liabilities was $11,669 Mil.
Long-Term Debt was $8,818 Mil.
Net Income was 876 + 748 + 744 + 380 = $2,748 Mil.
Non Operating Income was -168 + 0 + -162 + 0 = $-330 Mil.
Cash Flow from Operations was 1424 + 1053 + 898 + 816 = $4,191 Mil.
Accounts Receivable was $5,191 Mil.
Revenue was 5059 + 4924 + 4901 + 5249 = $20,133 Mil.
Gross Profit was 2630 + 2593 + 2590 + 2785 = $10,598 Mil.
Total Current Assets was $13,906 Mil.
Total Assets was $47,850 Mil.
Property, Plant and Equipment(Net PPE) was $6,501 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,599 Mil.
Selling, General & Admin. Expense(SGA) was $5,245 Mil.
Total Current Liabilities was $12,160 Mil.
Long-Term Debt was $10,061 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)
=(5410 / 20534) / (5191 / 20133)
=0.26346547 / 0.25783539
=1.0218

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)
=(2661 / 20133) / (2809 / 20534)
=0.52639944 / 0.53866758
=0.9772

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 - (13922 + 6551) / 46608) / (1 - (13906 + 6501) / 47850)
=0.56074065 / 0.57352142
=0.9777

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
=20534 / 20133
=1.0199

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))
=(1599 / (1599 + 6501)) / (1979 / (1979 + 6551))
=0.19740741 / 0.23200469
=0.8509

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)
=(5200 / 20534) / (5245 / 20133)
=0.25323853 / 0.26051756
=0.9721

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)
=((8818 + 11669) / 46608) / ((10061 + 12160) / 47850)
=0.43955973 / 0.46438871
=0.9465

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
=(2748 - -330 - 4191) / 46608
=-0.0239

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 -2.57 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 0.97661.09561.03141.08461.11370.86030.94070.99880.80830.9581
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 -2.14-2.55-2.15-2.33-2.56-2.59-2.47-2.52-2.88-2.68

Teva Pharmaceutical Industries Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.83710.84810.80830.85960.98040.9250.95810.95970.99161.0218
GMI 1.06351.02960.99110.97220.97990.98430.99470.99780.99490.9772
AQI 1.03211.03850.93070.97650.97421.00421.03531.00330.99490.9777
SGI 1.18611.21641.10951.04040.99650.97050.99991.01481.02441.0199
DEPI 0.8770.72570.71570.89120.97871.05241.07311.00520.85960.8509
SGAI 0.96321.01211.04581.08281.08221.06091.03961.0090.98410.9721
LVGI 1.33121.22491.01930.98421.03490.98760.96790.99530.93680.9465
TATA -0.0162-0.0446-0.0487-0.0632-0.085-0.0551-0.0382-0.0285-0.0067-0.0239
M-score -2.61-2.71-2.87-2.91-2.95-2.84-2.67-2.64-2.49-2.57
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