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Varian Medical Systems Inc (NYSE:VAR)
Beneish M-Score
-2.53 (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.

Varian Medical Systems Inc has a M-score of -2.53 suggests that the company is not a manipulator.

VAR' s 10-Year Beneish M-Score Range
Min: -2.97   Max: -2
Current: -2.53

-2.97
-2

During the past 13 years, the highest Beneish M-Score of Varian Medical Systems Inc was -2.00. The lowest was -2.97. 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 Varian Medical Systems Inc 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 * 0.8797+0.528 * 0.9953+0.404 * 1.1382+0.892 * 1.0237+0.115 * 0.9671
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0632+4.679 * 0-0.327 * 0.9962
=-2.53

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $708 Mil.
Revenue was 759.406 + 737.854 + 812.107 + 747.685 = $3,057 Mil.
Gross Profit was 322.538 + 327.008 + 340.059 + 323.727 = $1,313 Mil.
Total Current Assets was $2,590 Mil.
Total Assets was $3,460 Mil.
Property, Plant and Equipment(Net PPE) was $335 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $504 Mil.
Total Current Liabilities was $1,271 Mil.
Long-Term Debt was $363 Mil.
Net Income was 105.969 + 93.314 + 105.865 + 107.09 = $412 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 53.314 + 78.952 + 193.397 + 86.476 = $412 Mil.
Accounts Receivable was $786 Mil.
Revenue was 778.506 + 711.502 + 769.93 + 726.211 = $2,986 Mil.
Gross Profit was 328.31 + 309.579 + 328.496 + 310.465 = $1,277 Mil.
Total Current Assets was $2,678 Mil.
Total Assets was $3,476 Mil.
Property, Plant and Equipment(Net PPE) was $326 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $463 Mil.
Total Current Liabilities was $1,235 Mil.
Long-Term Debt was $413 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)
=(707.927 / 3057.052) / (786.029 / 2986.149)
=0.23157179 / 0.26322498
=0.8797

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)
=(327.008 / 2986.149) / (322.538 / 3057.052)
=0.42759085 / 0.42960735
=0.9953

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 - (2590.351 + 334.807) / 3459.536) / (1 - (2678.304 + 325.842) / 3475.838)
=0.15446522 / 0.13570598
=1.1382

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
=3057.052 / 2986.149
=1.0237

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))
=(60.992 / (60.992 + 325.842)) / (65.215 / (65.215 + 334.807))
=0.1576697 / 0.16302853
=0.9671

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)
=(503.681 / 3057.052) / (462.748 / 2986.149)
=0.16476036 / 0.15496481
=1.0632

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)
=((362.5 + 1270.768) / 3459.536) / ((412.5 + 1234.736) / 3475.838)
=0.47210609 / 0.47391046
=0.9962

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
=(412.238 - 0 - 412.139) / 3459.536
=0

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.

Varian Medical Systems Inc has a M-score of -2.53 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.

Varian Medical Systems Inc Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 1.08941.16010.97840.81331.11670.95690.97421.00760.96271.0115
GMI 0.97781.03320.99420.98490.97730.99680.99491.02641.00360.9949
AQI 0.83461.05611.40370.87790.87661.00110.88930.99730.90411.21
SGI 1.1191.15571.09841.17931.06971.06441.10191.0811.04841.0363
DEPI 1.20381.08171.17091.0970.99650.94630.98290.9111.02611.0657
SGAI 0.9721.06520.99430.98760.98250.92761.02151.02280.99061.1057
LVGI 1.04711.00491.06420.84430.91011.05711.14280.95281.07561.0194
TATA -0.03690.0225-0.0404-0.05030.0063-0.0432-0.0296-0.0228-0.0049-0.0135
M-score -2.53-2.05-2.44-2.72-2.31-2.68-2.65-2.49-2.55-2.44

Varian Medical Systems Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.02021.05851.01750.96271.06771.05881.1111.01150.90570.8797
GMI 1.01070.98860.99711.00360.99990.99850.99050.99490.99370.9953
AQI 0.92070.93990.9370.90410.97630.95971.05371.211.09481.1382
SGI 1.08251.07161.05751.04841.04051.02681.02681.03631.03371.0237
DEPI 0.91710.91870.91861.02611.09031.12731.13811.06571.01680.9671
SGAI 1.03391.02991.01080.99060.98081.03811.09391.10571.16931.0632
LVGI 0.98991.01670.96281.07561.09061.12041.15081.01941.04580.9962
TATA -0.0270.0001-0.0165-0.00490.0042-0.0290.0013-0.0135-0.02520
M-score -2.55-2.41-2.52-2.55-2.39-2.59-2.38-2.44-2.66-2.53
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