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Zimmer Holdings Inc (NYSE:ZMH)
Beneish M-Score
0.00 (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.

Zimmer Holdings Inc has a M-score of signals that the company is a manipulator.

ZMH' s 10-Year Beneish M-Score Range
Min: -2.93   Max: 2.19
Current: 0

-2.93
2.19

During the past 13 years, the highest Beneish M-Score of Zimmer Holdings Inc was 2.19. The lowest was -2.93. And the median was -2.60.


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 Zimmer Holdings Inc 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Mar15) TTM:Last Year (May14) TTM:
Accounts Receivable was $870 Mil.
Revenue was 1134.4 + 1222.9 + 1106 + 1182.9 = $4,646 Mil.
Gross Profit was 855.7 + 910 + 807.7 + 849.7 = $3,423 Mil.
Total Current Assets was $11,917 Mil.
Total Assets was $17,190 Mil.
Property, Plant and Equipment(Net PPE) was $1,301 Mil.
Depreciation, Depletion and Amortization(DDA) was $364 Mil.
Selling, General & Admin. Expense(SGA) was $1,805 Mil.
Total Current Liabilities was $909 Mil.
Long-Term Debt was $9,061 Mil.
Net Income was 177.1 + 156.6 + 165.5 + 176.5 = $676 Mil.
Non Operating Income was -22.6 + -19.1 + -10.5 + -10 = $-62 Mil.
Cash Flow from Operations was 91.5 + 354.2 + 255.7 + 254.1 = $956 Mil.
Accounts Receivable was $0 Mil.
Revenue was 0 + 1161.5 + 1240.7 + 1074.3 = $3,477 Mil.
Gross Profit was 0 + 857.8 + 899.9 + 745.5 = $2,503 Mil.
Total Current Assets was $0 Mil.
Total Assets was $0 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $784 Mil.
Selling, General & Admin. Expense(SGA) was $1,360 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $0 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)
=(869.8 / 4646.2) / (0 / 3476.5)
=0.18720675 / 0
=

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)
=(910 / 3476.5) / (855.7 / 4646.2)
=0.72003452 / 0.73675262
=

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 - (11917.2 + 1300.7) / 17190.1) / (1 - (0 + 0) / 0)
=0.23107486 /
=

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
=4646.2 / 3476.5
=

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))
=(784.2 / (784.2 + 0)) / (363.8 / (363.8 + 1300.7))
=1 / 0.21856413
=

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)
=(1804.7 / 4646.2) / (1359.5 / 3476.5)
=0.38842495 / 0.39105422
=

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)
=((9061.2 + 908.7) / 17190.1) / ((0 + 0) / 0)
=0.57997917 /
=

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
=(675.7 - -62.2 - 955.5) / 17190.1
=-0.0127

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.

Zimmer Holdings Inc has a M-score of signals that the company is likely to 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.

Zimmer Holdings Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13May14
DSRI 0.90611.12180.96681.02781.03181.00211.02481.04991.0240.8841
GMI 0.95270.99761.0021.02280.99990.99731.01630.99951.03681.0657
AQI 0.97590.95320.94220.9720.9370.96061.00290.95930.95571.6937
SGI 1.10241.06371.1151.05740.99381.03051.05491.00451.03390.6972
DEPI 1.07841.05641.02691.07070.82590.98850.95330.99541.01890.5499
SGAI 0.96021.01180.98551.12561.00121.0091.02960.91060.99831.0625
LVGI 0.51721.01241.05541.32281.37320.98731.24431.00040.98332.3337
TATA -0.023-0.0351-0.0214-0.0262-0.0514-0.0746-0.0489-0.044-0.0211-0.0467
M-score -2.44-2.50-2.54-2.64-2.86-2.82-2.72-2.64-2.52-3.26

Zimmer Holdings Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14May14Jun14Sep14Dec14Mar15
DSRI 1.02111.0281.00391.0240.99011.34551.35571.28491
GMI 0.99981.00981.02661.03681.03671.00010.99020.9860.9773
AQI 0.97731.02341.01430.95570.94070.93620.96710.96390.5289
SGI 0.99841.01121.02351.03391.03940.78570.74630.75591.3365
DEPI 1.05981.08991.05031.01890.96190.59160.59570.61884.5753
SGAI 0.91250.95870.95810.99830.98580.94760.97290.9790.9933
LVGI 0.99660.97970.9390.98330.98241.02940.92310.92292.0934
TATA -0.0413-0.0419-0.0377-0.0211-0.0219-0.065-0.0664-0.0887-0.0127
M-score -2.64-2.60-2.58-2.52-2.56-2.73-2.72-2.89-2.39
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