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Xerox Corporation (NYSE:XRX)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

XRX' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -1.99
Current: -2.8

-3.04
-1.99

During the past 13 years, the highest Beneish M-Score of Xerox Corporation was -1.99. The lowest was -3.04. And the median was -2.59.


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 * 0.9922+0.528 * 1.0253+0.404 * 0.9997+0.892 * 0.9683+0.115 * 0.9611
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9748+4.679 * -0.065-0.327 * 0.9778
=-2.80

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $4,721 Mil.
Revenue was 5292 + 5121 + 5569 + 5262 = $21,244 Mil.
Gross Profit was 1628 + 1547 + 1709 + 1655 = $6,539 Mil.
Total Current Assets was $7,979 Mil.
Total Assets was $28,508 Mil.
Property, Plant and Equipment(Net PPE) was $1,968 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,407 Mil.
Selling, General & Admin. Expense(SGA) was $3,988 Mil.
Total Current Liabilities was $5,690 Mil.
Long-Term Debt was $6,354 Mil.
Net Income was 266 + 281 + 306 + 286 = $1,139 Mil.
Non Operating Income was 11 + 22 + 626 + -208 = $451 Mil.
Cash Flow from Operations was 325 + 286 + 968 + 961 = $2,540 Mil.
Accounts Receivable was $4,914 Mil.
Revenue was 5391 + 5202 + 5923 + 5423 = $21,939 Mil.
Gross Profit was 1697 + 1586 + 1912 + 1729 = $6,924 Mil.
Total Current Assets was $8,212 Mil.
Total Assets was $29,327 Mil.
Property, Plant and Equipment(Net PPE) was $2,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,347 Mil.
Selling, General & Admin. Expense(SGA) was $4,225 Mil.
Total Current Liabilities was $6,305 Mil.
Long-Term Debt was $6,366 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)
=(4721 / 21244) / (4914 / 21939)
=0.22222745 / 0.22398468
=0.9922

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)
=(1547 / 21939) / (1628 / 21244)
=0.31560235 / 0.30780456
=1.0253

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 - (7979 + 1968) / 28508) / (1 - (8212 + 2015) / 29327)
=0.6510804 / 0.65127698
=0.9997

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
=21244 / 21939
=0.9683

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))
=(1347 / (1347 + 2015)) / (1407 / (1407 + 1968))
=0.40065437 / 0.41688889
=0.9611

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)
=(3988 / 21244) / (4225 / 21939)
=0.18772359 / 0.19257942
=0.9748

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)
=((6354 + 5690) / 28508) / ((6366 + 6305) / 29327)
=0.4224779 / 0.43205919
=0.9778

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
=(1139 - 451 - 2540) / 28508
=-0.065

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 -2.80 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96020.9181.02461.03190.83691.02390.86180.88770.99480.9774
GMI 1.0350.98821.01761.08320.96610.98041.16581.0511.0491.0406
AQI 0.96981.07710.95511.08061.00430.9461.28081.00450.9830.9732
SGI 1.00130.99871.01241.03211.07330.86211.42521.04590.98960.9573
DEPI 1.03530.99721.16971.03770.92930.91410.68851.07580.96040.9555
SGAI 1.07460.90020.96331.04230.97971.06380.78060.92950.96361.0078
LVGI 0.90990.89030.9990.98071.16380.97320.84191.00230.9950.9744
TATA -0.0794-0.0543-0.0193-0.03470.0134-0.042-0.0477-0.0271-0.0263-0.0447
M-score -2.86-2.73-2.52-2.50-2.58-2.82-2.20-2.62-2.59-2.74

Xerox Corporation Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.84590.91140.99130.99480.97731.03010.92350.97790.97460.9922
GMI 1.0521.03761.04491.04081.03671.04451.03351.04021.0311.0253
AQI 1.02591.01941.00240.9831.00820.98370.99820.97320.97970.9997
SGI 1.01281.00480.99090.98960.97460.97110.97090.95690.96620.9683
DEPI 0.9180.90260.91490.96040.95190.95680.96870.95550.95650.9611
SGAI 0.94480.95220.95830.96360.98310.98810.99421.0080.98560.9748
LVGI 1.061.01871.00410.9950.96370.95910.91870.97440.980.9778
TATA -0.0212-0.0184-0.0254-0.0231-0.0265-0.0373-0.0431-0.0577-0.0708-0.065
M-score -2.69-2.62-2.59-2.58-2.62-2.63-2.74-2.80-2.85-2.80
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