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Xerox Corp (NYSE:XRX)
Beneish M-Score
-2.79 (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 Corp has a M-score of -2.74 suggests that the company is not a manipulator.

XRX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.84   Max: -1
Current: -2.79

-3.84
-1

During the past 13 years, the highest Beneish M-Score of Xerox Corp was -1.00. The lowest was -3.84. And the median was -2.57.


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 Corp 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 * 0.877+0.528 * 1.1227+0.404 * 1.0143+0.892 * 0.9842+0.115 * 0.9408
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.96+4.679 * -0.037-0.327 * 1.0913
=-2.74

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $2,612 Mil.
Revenue was 4333 + 4590 + 4469 + 5033 = $18,425 Mil.
Gross Profit was 987 + 1426 + 1394 + 1616 = $5,423 Mil.
Total Current Assets was $6,999 Mil.
Total Assets was $24,946 Mil.
Property, Plant and Equipment(Net PPE) was $1,535 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,266 Mil.
Selling, General & Admin. Expense(SGA) was $3,618 Mil.
Total Current Liabilities was $5,382 Mil.
Long-Term Debt was $6,393 Mil.
Net Income was -34 + 12 + 225 + 156 = $359 Mil.
Non Operating Income was -40 + -225 + -6 + -38 = $-309 Mil.
Cash Flow from Operations was 271 + 349 + 113 + 857 = $1,590 Mil.
Accounts Receivable was $3,026 Mil.
Revenue was 4795 + 4941 + 4771 + 4213 = $18,720 Mil.
Gross Profit was 1542 + 1585 + 1503 + 1556 = $6,186 Mil.
Total Current Assets was $7,882 Mil.
Total Assets was $27,877 Mil.
Property, Plant and Equipment(Net PPE) was $1,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,416 Mil.
Selling, General & Admin. Expense(SGA) was $3,829 Mil.
Total Current Liabilities was $5,703 Mil.
Long-Term Debt was $6,355 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)
=(2612 / 18425) / (3026 / 18720)
=0.14176391 / 0.1616453
=0.877

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)
=(1426 / 18720) / (987 / 18425)
=0.33044872 / 0.29432836
=1.1227

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 - (6999 + 1535) / 24946) / (1 - (7882 + 1914) / 27877)
=0.65790107 / 0.6485992
=1.0143

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
=18425 / 18720
=0.9842

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))
=(1416 / (1416 + 1914)) / (1266 / (1266 + 1535))
=0.42522523 / 0.45198144
=0.9408

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)
=(3618 / 18425) / (3829 / 18720)
=0.19636364 / 0.2045406
=0.96

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)
=((6393 + 5382) / 24946) / ((6355 + 5703) / 27877)
=0.47201956 / 0.43254296
=1.0913

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
=(359 - -309 - 1590) / 24946
=-0.037

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 Corp has a M-score of -2.74 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 Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.06311.15220.7370.9041.1650.90881.0441.0241.02670.9863
GMI 1.01541.00161.00910.98081.11561.06391.00621.02531.01411.096
AQI 0.95511.08061.00430.9461.24741.03140.9830.97320.97241.0822
SGI 1.01541.08971.07330.86211.42521.01230.93250.97970.97670.9235
DEPI 1.16971.03770.92930.91410.82030.9030.96040.95550.86531.0451
SGAI 0.96030.98730.97971.06150.77690.95061.00451.0040.95221.0174
LVGI 0.9990.98071.16380.97320.84191.00230.9950.97441.03311.0447
TATA -0.0193-0.03470.0234-0.067-0.0477-0.0223-0.0398-0.0408-0.0347-0.0284
M-score -2.48-2.38-2.60-3.05-1.94-2.61-2.69-2.66-2.66-2.62

Xerox Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98821.03081.01651.02461.09651.02851.03961.0130.8770.9863
GMI 0.99351.0211.00860.99380.98821.01291.0241.03791.12271.096
AQI 0.99820.97320.97970.99970.99430.97240.98240.98041.01431.0822
SGI 0.94810.97320.96640.94310.92330.9750.9810.98580.98420.9235
DEPI 0.96870.95550.95650.96110.94180.86530.88090.92370.94081.0451
SGAI 1.02151.00780.9981.00541.0120.95250.96150.96320.961.0174
LVGI 0.91870.97440.980.97781.04141.03311.03961.0671.09131.0447
TATA -0.0651-0.0408-0.0529-0.0428-0.0291-0.0327-0.0294-0.0362-0.037-0.0349
M-score -2.83-2.66-2.74-2.71-2.63-2.65-2.61-2.66-2.74-2.65
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