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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 -2.66 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -1.83. The lowest was -2.98. And the median was -2.46.
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 * 0.9597||+||0.528 * 0.9978||+||0.404 * 1.0033||+||0.892 * 1.0148||+||0.115 * 0.7917|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.009||+||4.679 * -0.0285||-||0.327 * 0.9953|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $5,275 Mil.|
Revenue was 5001 + 5430 + 5059 + 4924 = $20,414 Mil.
Gross Profit was 2697 + 2894 + 2630 + 2593 = $10,814 Mil.
Total Current Assets was $13,448 Mil.
Total Assets was $46,892 Mil.
Property, Plant and Equipment(Net PPE) was $6,665 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,701 Mil.
Selling, General & Admin. Expense(SGA) was $5,303 Mil.
Total Current Liabilities was $11,402 Mil.
Long-Term Debt was $10,244 Mil.
Net Income was 744 + 380 + 711 + -452 = $1,383 Mil.
Non Operating Income was -162 + 0 + -152 + 0 = $-314 Mil.
Cash Flow from Operations was 898 + 816 + 444 + 875 = $3,033 Mil.
|Accounts Receivable was $5,416 Mil.
Revenue was 4901 + 5249 + 4972 + 4994 = $20,116 Mil.
Gross Profit was 2590 + 2785 + 2601 + 2657 = $10,633 Mil.
Total Current Assets was $14,416 Mil.
Total Assets was $48,069 Mil.
Property, Plant and Equipment(Net PPE) was $6,291 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,479 Mil.
Selling, General & Admin. Expense(SGA) was $5,179 Mil.
Total Current Liabilities was $12,356 Mil.
Long-Term Debt was $9,938 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)|
|=||(5275 / 20414)||/||(5416 / 20116)|
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)|
|=||(2894 / 20116)||/||(2697 / 20414)|
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 - (13448 + 6665) / 46892)||/||(1 - (14416 + 6291) / 48069)|
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))|
|=||(2479 / (2479 + 6291))||/||(3701 / (3701 + 6665))|
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)|
|=||(5303 / 20414)||/||(5179 / 20116)|
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)|
|=||((10244 + 11402) / 46892)||/||((9938 + 12356) / 48069)|
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|
|=||(1383 - -314||-||3033)||/||46892|
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 -2.66 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