Switch to:
Varian Medical Systems Inc (NYSE:VAR)
Beneish M-Score
-2.43 (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 -2.44 suggests that the company is not a manipulator.

VAR' s 10-Year Beneish M-Score Range
Min: -2.9   Max: -2.05
Current: -2.43

-2.9
-2.05

During the past 13 years, the highest Beneish M-Score of Varian Medical Systems Inc was -2.05. The lowest was -2.90. And the median was -2.53.


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 * 1.0115+0.528 * 0.9949+0.404 * 1.21+0.892 * 1.0363+0.115 * 1.0657
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1057+4.679 * -0.0135-0.327 * 1.0194
=-2.44

* 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 $732 Mil.
Revenue was 812.107 + 747.685 + 778.506 + 711.502 = $3,050 Mil.
Gross Profit was 340.059 + 323.727 + 328.31 + 309.579 = $1,302 Mil.
Total Current Assets was $2,494 Mil.
Total Assets was $3,357 Mil.
Property, Plant and Equipment(Net PPE) was $338 Mil.
Depreciation, Depletion and Amortization(DDA) was $62 Mil.
Selling, General & Admin. Expense(SGA) was $496 Mil.
Total Current Liabilities was $1,202 Mil.
Long-Term Debt was $388 Mil.
Net Income was 105.865 + 107.09 + 92.788 + 97.96 = $404 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 193.397 + 86.476 + 125.852 + 43.261 = $449 Mil.
Accounts Receivable was $698 Mil.
Revenue was 769.93 + 726.211 + 768.358 + 678.398 = $2,943 Mil.
Gross Profit was 328.496 + 310.465 + 319.638 + 291.088 = $1,250 Mil.
Total Current Assets was $2,705 Mil.
Total Assets was $3,468 Mil.
Property, Plant and Equipment(Net PPE) was $315 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $433 Mil.
Total Current Liabilities was $1,161 Mil.
Long-Term Debt was $450 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)
=(731.929 / 3049.8) / (698.254 / 2942.897)
=0.23999246 / 0.23726756
=1.0115

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)
=(323.727 / 2942.897) / (340.059 / 3049.8)
=0.42464517 / 0.42680668
=0.9949

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 - (2494.165 + 337.999) / 3357.29) / (1 - (2704.783 + 315.331) / 3468.474)
=0.15641366 / 0.12926722
=1.21

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
=3049.8 / 2942.897
=1.0363

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))
=(62.859 / (62.859 + 315.331)) / (62.457 / (62.457 + 337.999))
=0.16621011 / 0.1559647
=1.0657

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)
=(495.68 / 3049.8) / (432.589 / 2942.897)
=0.16252869 / 0.14699427
=1.1057

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)
=((387.5 + 1201.654) / 3357.29) / ((450 + 1160.579) / 3468.474)
=0.47334427 / 0.46434801
=1.0194

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
=(403.703 - 0 - 448.986) / 3357.29
=-0.0135

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 -2.44 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 1.08941.16010.96650.82331.11670.95690.97421.00760.96271.0115
GMI 0.97651.03321.00410.97510.97730.99680.99491.02641.00360.9949
AQI 0.82731.05611.40370.87790.87661.00110.88930.99730.90411.21
SGI 1.1191.15571.11191.1651.06971.06441.10191.0811.04841.0363
DEPI 1.20381.08171.17091.0970.99650.94630.98290.9111.02611.0657
SGAI 0.9721.065210.98190.98250.92761.02151.02280.99061.1057
LVGI 1.03781.00491.06420.84430.91011.05711.14280.95281.07561.0194
TATA -0.03690.0225-0.0404-0.05030.0063-0.0432-0.0296-0.0228-0.0049-0.0135
M-score -2.53-2.05-2.44-2.73-2.31-2.68-2.65-2.49-2.55-2.44

Varian Medical Systems Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.95571.00761.02021.05851.01750.96271.06771.05881.1111.0115
GMI 1.03751.02641.01070.98860.99711.00360.99990.99850.99050.9949
AQI 0.97290.99730.92070.93990.9370.90410.97630.95971.05371.21
SGI 1.09491.0811.08251.07161.05751.04841.04051.02681.02681.0363
DEPI 0.94310.9110.91710.91870.91861.02611.09031.12731.13811.0657
SGAI 1.00461.02281.03391.02991.01080.99060.98081.03811.09391.1057
LVGI 1.12030.95280.98991.01670.96281.07561.09061.12041.15081.0194
TATA -0.0146-0.0228-0.0270.0001-0.0165-0.00490.0042-0.0290.0013-0.0135
M-score -2.54-2.49-2.55-2.41-2.52-2.55-2.39-2.59-2.38-2.44
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK