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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Beneish M-Score
-2.04 (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 -2.04 signals that the company is a manipulator.

TEVA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.11   Max: -1.61
Current: -2.04

-3.11
-1.61

During the past 13 years, the highest Beneish M-Score of Teva Pharmaceutical Industries Ltd was -1.61. The lowest was -3.11. And the median was -2.52.


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 * 1.5034+0.528 * 1.0251+0.404 * 1.2099+0.892 * 1.0177+0.115 * 1.1213
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1425+4.679 * -0.0163-0.327 * 1.1485
=-2.04

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $8,071 Mil.
Revenue was 5563 + 5038 + 4810 + 4881 = $20,292 Mil.
Gross Profit was 2801 + 2877 + 2791 + 2847 = $11,316 Mil.
Total Current Assets was $17,386 Mil.
Total Assets was $98,747 Mil.
Property, Plant and Equipment(Net PPE) was $8,379 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,527 Mil.
Selling, General & Admin. Expense(SGA) was $5,494 Mil.
Total Current Liabilities was $19,286 Mil.
Long-Term Debt was $33,179 Mil.
Net Income was 412 + 254 + 636 + 500 = $1,802 Mil.
Non Operating Income was 0 + 0 + 0 + -2000 = $-2,000 Mil.
Cash Flow from Operations was 1461 + 963 + 1376 + 1615 = $5,415 Mil.
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 $4,725 Mil.
Total Current Liabilities was $12,978 Mil.
Long-Term Debt was $9,516 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)
=(8071 / 20292) / (5275 / 19939)
=0.39774295 / 0.2645569
=1.5034

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)
=(11398 / 19939) / (11316 / 20292)
=0.57164351 / 0.55765819
=1.0251

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 - (17386 + 8379) / 98747) / (1 - (12500 + 6422) / 48625)
=0.73908068 / 0.61085861
=1.2099

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
=20292 / 19939
=1.0177

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))
=(1342 / (1342 + 6422)) / (1527 / (1527 + 8379))
=0.17284905 / 0.154149
=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)
=(5494 / 20292) / (4725 / 19939)
=0.27074709 / 0.23697277
=1.1425

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)
=((33179 + 19286) / 98747) / ((9516 + 12978) / 48625)
=0.53130728 / 0.46260154
=1.1485

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
=(1802 - -2000 - 5415) / 98747
=-0.0163

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 -2.04 signals that the company is likely to 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 local exchange's currency.

Teva Pharmaceutical Industries Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.03141.08461.11370.86030.94070.99880.80830.95811.01521.0205
GMI 0.93290.97710.96291.01570.94261.08220.99110.99470.96640.9438
AQI 1.5330.90731.14610.96981.0881.04030.93071.03530.96070.984
SGI 1.60151.11891.17831.25391.15991.13591.10950.99990.99790.9694
DEPI 0.92230.95711.45920.60541.06061.20210.71571.07311.05811.1255
SGAI 1.22851.08071.12111.11130.94451.01291.04581.33750.72741.1107
LVGI 1.0890.88061.14410.83491.01721.3181.01930.96790.95490.8774
TATA -0.078-0.0008-0.0789-0.0413-0.0205-0.028-0.0509-0.0246-0.0312-0.036
M-score -2.18-2.33-2.56-2.59-2.47-2.51-2.88-2.66-2.58-2.66

Teva Pharmaceutical Industries Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.99161.02181.01521.05251.05171.00411.02050.97930.99591.5034
GMI 0.99490.97720.96640.95830.93480.94230.94380.9520.9821.0251
AQI 0.99490.97770.96070.92831.07381.08940.9841.07780.93321.2099
SGI 1.02441.01990.99790.99210.98240.9710.96940.96180.96921.0177
DEPI 1.02271.01851.05811.07861.10221.12131.12551.14361.11731.1213
SGAI 1.27111.25690.72740.72490.73480.72371.11071.11421.13091.1425
LVGI 0.93680.94650.95491.00851.06021.05240.87740.83870.81441.1485
TATA -0.00430.0024-0.0755-0.0907-0.1003-0.1393-0.036-0.0324-0.0268-0.0163
M-score -2.51-2.48-2.79-2.86-2.88-3.10-2.66-2.63-2.62-2.04
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