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Xerox Corporation (NYSE:XRX)
Beneish M-Score
-2.77 (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 -2.77 suggests that the company is not a manipulator.

XRX' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.97
Current: -2.77

-3.16
-1.97

During the past 13 years, the highest Beneish M-Score of Xerox Corporation was -1.97. The lowest was -3.16. 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 * 0.9496+0.528 * 1.0306+0.404 * 0.9732+0.892 * 0.9854+0.115 * 0.9555
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9956+4.679 * -0.0507-0.327 * 0.9744
=-2.77

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $4,542 Mil.
Revenue was 5569 + 5262 + 5402 + 5356 = $21,589 Mil.
Gross Profit was 1709 + 1655 + 1698 + 1650 = $6,712 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 $4,154 Mil.
Total Current Liabilities was $5,686 Mil.
Long-Term Debt was $6,904 Mil.
Net Income was 306 + 286 + 271 + 296 = $1,159 Mil.
Non Operating Income was 626 + -208 + -45 + -117 = $256 Mil.
Cash Flow from Operations was 968 + 961 + 533 + -87 = $2,375 Mil.
Accounts Receivable was $4,854 Mil.
Revenue was 5763 + 5275 + 5368 + 5503 = $21,909 Mil.
Gross Profit was 1847 + 1661 + 1751 + 1761 = $7,020 Mil.
Total Current Assets was $8,273 Mil.
Total Assets was $30,015 Mil.
Property, Plant and Equipment(Net PPE) was $2,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,301 Mil.
Selling, General & Admin. Expense(SGA) was $4,234 Mil.
Total Current Liabilities was $5,910 Mil.
Long-Term Debt was $7,447 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)
=(4542 / 21589) / (4854 / 21909)
=0.21038492 / 0.22155279
=0.9496

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)
=(1655 / 21909) / (1709 / 21589)
=0.32041627 / 0.31089907
=1.0306

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 - (8511 + 2025) / 29036) / (1 - (8273 + 2091) / 30015)
=0.6371401 / 0.65470598
=0.9732

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
=21589 / 21909
=0.9854

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))
=(1301 / (1301 + 2091)) / (1358 / (1358 + 2025))
=0.38354953 / 0.40141886
=0.9555

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)
=(4154 / 21589) / (4234 / 21909)
=0.1924128 / 0.19325391
=0.9956

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)
=((6904 + 5686) / 29036) / ((7447 + 5910) / 30015)
=0.43359967 / 0.44501083
=0.9744

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
=(1159 - 256 - 2375) / 29036
=-0.0507

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 -2.77 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 0.96020.97221.02150.97730.83691.02390.86180.88771.02460.9489
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 -2.61-2.51-2.52-2.54-2.58-2.83-2.20-2.50-2.68-2.74

Xerox Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.83340.88770.84590.91841.00571.01660.9921.0290.91010.9496
GMI 1.07421.0421.02741.03981.05031.04831.05071.04571.02851.0306
AQI 1.01691.00451.02591.01941.00240.9831.00820.98370.99820.9732
SGI 1.1391.04591.01280.99710.97670.96830.96020.97230.98520.9854
DEPI 0.88071.07580.9180.90260.91490.96040.95190.95680.96870.9555
SGAI 0.88010.93590.95140.96210.97070.97230.98920.98720.98840.9956
LVGI 0.98471.00231.061.01871.00410.9950.96370.95910.91870.9744
TATA -0.0073-0.0055-0.00030.00570.005-0.0552-0.0538-0.0657-0.0812-0.0507
M-score -2.49-2.53-2.61-2.51-2.45-2.73-2.74-2.76-2.92-2.77
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