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Xerox Corporation (NYSE:XRX)
Beneish M-Score
-2.66 (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.

Xerox Corporation has a M-score of -2.66 suggests that the company is not a manipulator.

XRX' s 10-Year Beneish M-Score Range
Min: -3.21   Max: -1.91
Current: -2.66

-3.21
-1.91

During the past 13 years, the highest Beneish M-Score of Xerox Corporation was -1.91. The lowest was -3.21. And the median was -2.65.


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 Xerox Corporation 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 * 1.0267+0.528 * 1.0137+0.404 * 0.9724+0.892 * 0.9766+0.115 * 0.8653
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9521+4.679 * -0.0355-0.327 * 1.0331
=-2.66

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,546 Mil.
Revenue was 4040 + 5120 + 5292 + 5121 = $19,573 Mil.
Gross Profit was 1502 + 1575 + 1628 + 1547 = $6,252 Mil.
Total Current Assets was $8,874 Mil.
Total Assets was $27,658 Mil.
Property, Plant and Equipment(Net PPE) was $1,648 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,426 Mil.
Selling, General & Admin. Expense(SGA) was $3,793 Mil.
Total Current Liabilities was $6,076 Mil.
Long-Term Debt was $6,314 Mil.
Net Income was 156 + 266 + 266 + 281 = $969 Mil.
Non Operating Income was -128 + -18 + 11 + 22 = $-113 Mil.
Cash Flow from Operations was 857 + 595 + 325 + 286 = $2,063 Mil.
Accounts Receivable was $2,539 Mil.
Revenue was 4213 + 5235 + 5391 + 5202 = $20,041 Mil.
Gross Profit was 1556 + 1650 + 1697 + 1586 = $6,489 Mil.
Total Current Assets was $8,511 Mil.
Total Assets was $29,036 Mil.
Property, Plant and Equipment(Net PPE) was $2,025 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,358 Mil.
Selling, General & Admin. Expense(SGA) was $4,079 Mil.
Total Current Liabilities was $5,686 Mil.
Long-Term Debt was $6,904 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)
=(2546 / 19573) / (2539 / 20041)
=0.13007715 / 0.12669028
=1.0267

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)
=(1575 / 20041) / (1502 / 19573)
=0.32378624 / 0.31941961
=1.0137

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 - (8874 + 1648) / 27658) / (1 - (8511 + 2025) / 29036)
=0.61956758 / 0.6371401
=0.9724

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
=19573 / 20041
=0.9766

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))
=(1358 / (1358 + 2025)) / (1426 / (1426 + 1648))
=0.40141886 / 0.4638907
=0.8653

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)
=(3793 / 19573) / (4079 / 20041)
=0.19378736 / 0.20353276
=0.9521

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)
=((6314 + 6076) / 27658) / ((6904 + 5686) / 29036)
=0.44797165 / 0.43359967
=1.0331

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
=(969 - -113 - 2063) / 27658
=-0.0355

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.

Xerox Corporation has a M-score of -2.66 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.

Xerox Corporation Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.04051.06311.15220.7370.9041.1650.87971.01331.091.0267
GMI 1.09551.01541.00161.00910.98081.11561.0511.05950.98581.0141
AQI 1.07710.95511.08061.00430.9461.24741.03140.9830.97320.9724
SGI 0.9431.01541.08971.07330.86211.42521.04590.96070.92040.9767
DEPI 0.99721.16971.03770.92930.91410.82030.9030.96040.95550.8653
SGAI 1.0370.96030.98730.97971.06150.77690.93590.97591.04970.9522
LVGI 0.89030.9990.98071.16380.97320.84191.00230.9950.97441.0331
TATA -0.0144-0.0193-0.03470.0234-0.067-0.0383-0.0011-0.0447-0.0408-0.0347
M-score -2.45-2.48-2.38-2.60-3.05-1.90-2.52-2.69-2.68-2.66

Xerox Corporation Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.08841.00530.97931.05320.95951.09671.06341.05241.1071.0267
GMI 1.05851.05661.0531.04771.030.98960.98030.97720.98331.0137
AQI 1.00240.9831.00820.98370.99820.97320.97970.99970.99430.9724
SGI 0.97670.96830.95340.96490.97650.91470.92370.91820.91450.9766
DEPI 0.91490.96040.95190.95680.96870.95550.95650.96110.94180.8653
SGAI 0.97070.97230.99230.99050.99221.05321.02951.02181.01330.9521
LVGI 1.00410.9950.96370.95910.91870.97440.980.97781.04141.0331
TATA -0.0031-0.0393-0.043-0.0563-0.0702-0.0408-0.0538-0.0478-0.0351-0.0355
M-score -2.41-2.66-2.70-2.70-2.83-2.68-2.76-2.74-2.66-2.66
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