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Xerox Corporation (NYSE:XRX)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

XRX' s 10-Year Beneish M-Score Range
Min: -3.84   Max: -1
Current: -2.65

-3.84
-1

During the past 13 years, the highest Beneish M-Score of Xerox Corporation was -1.00. The lowest was -3.84. And the median was -2.51.


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 * 1.0323+0.528 * 1.0279+0.404 * 0.9943+0.892 * 0.9807+0.115 * 0.9418
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9605+4.679 * -0.0392-0.327 * 1.0414
=-2.65

* 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 $3,026 Mil.
Revenue was 5120 + 5292 + 5121 + 5642 = $21,175 Mil.
Gross Profit was 1575 + 1628 + 1547 + 1719 = $6,469 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 $3,931 Mil.
Total Current Liabilities was $5,703 Mil.
Long-Term Debt was $6,355 Mil.
Net Income was 266 + 266 + 281 + 306 = $1,119 Mil.
Non Operating Income was -18 + 11 + 22 + 23 = $38 Mil.
Cash Flow from Operations was 595 + 325 + 286 + 968 = $2,174 Mil.
Accounts Receivable was $2,989 Mil.
Revenue was 5235 + 5391 + 5202 + 5763 = $21,591 Mil.
Gross Profit was 1650 + 1697 + 1586 + 1847 = $6,780 Mil.
Total Current Assets was $8,070 Mil.
Total Assets was $29,016 Mil.
Property, Plant and Equipment(Net PPE) was $2,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,348 Mil.
Selling, General & Admin. Expense(SGA) was $4,173 Mil.
Total Current Liabilities was $5,646 Mil.
Long-Term Debt was $6,406 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)
=(3026 / 21175) / (2989 / 21591)
=0.14290437 / 0.13843731
=1.0323

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)
=(1628 / 21591) / (1575 / 21175)
=0.31401973 / 0.30550177
=1.0279

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 - (7882 + 1914) / 27877) / (1 - (8070 + 2018) / 29016)
=0.6485992 / 0.65232975
=0.9943

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
=21175 / 21591
=0.9807

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))
=(1348 / (1348 + 2018)) / (1416 / (1416 + 1914))
=0.40047534 / 0.42522523
=0.9418

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)
=(3931 / 21175) / (4173 / 21591)
=0.18564345 / 0.19327498
=0.9605

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)
=((6355 + 5703) / 27877) / ((6406 + 5646) / 29016)
=0.43254296 / 0.41535704
=1.0414

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
=(1119 - 38 - 2174) / 27877
=-0.0392

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 -2.65 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 0.96031.04051.06311.15220.7370.9041.1650.87971.01331.0173
GMI 1.01181.09551.01541.00160.96610.98041.16581.0511.05951.0303
AQI 0.96981.07710.95511.08061.00430.98791.22651.00450.9830.9732
SGI 1.00130.9431.01541.08971.07330.86211.42521.04590.96070.9861
DEPI 1.03530.99721.16971.03770.92930.71720.87751.07580.96040.9555
SGAI 0.98791.0370.96030.98730.97971.06380.77520.93590.97590.9951
LVGI 0.90370.89030.9990.98071.16380.97320.84191.00230.9950.9744
TATA -0.027-0.0144-0.0193-0.03470.0134-0.042-0.0477-0.0011-0.0447-0.0447
M-score -2.61-2.45-2.48-2.38-2.67-2.94-1.92-2.51-2.69-2.68

Xerox Corporation Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.95311.08841.00530.97931.05320.95951.02370.99240.98181.0323
GMI 1.0481.05851.05661.0531.04771.031.03421.02461.02141.0279
AQI 1.01941.00240.9831.00820.98370.99820.97320.97970.99970.9943
SGI 0.99710.97670.96830.95340.96490.97650.980.98990.98420.9807
DEPI 0.90260.91490.96040.95190.95680.96870.95550.95650.96110.9418
SGAI 0.96210.97070.97230.99230.99050.99220.99850.97610.96870.9605
LVGI 1.01871.00410.9950.96370.95910.91870.97440.980.97781.0414
TATA 0.0065-0.0031-0.0393-0.043-0.0563-0.0702-0.0447-0.0577-0.0518-0.0392
M-score -2.47-2.41-2.66-2.70-2.70-2.83-2.67-2.76-2.73-2.65
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