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GuruFocus has detected 8 Warning Signs with Apple Inc $AAPL.
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Apple Inc (NAS:AAPL)
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.

Apple Inc has a M-score of -2.80 suggests that the company is not a manipulator.

AAPL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.47   Max: -1.04
Current: -2.8

-4.47
-1.04

During the past 13 years, the highest Beneish M-Score of Apple Inc was -1.04. The lowest was -4.47. 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 Apple 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 * 0.9772+0.528 * 1.0362+0.404 * 0.9637+0.892 * 0.9689+0.115 * 1.2068
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0354+4.679 * -0.0602-0.327 * 1.0467
=-2.80

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $11,579 Mil.
Revenue was 52896 + 78351 + 46852 + 42358 = $220,457 Mil.
Gross Profit was 20591 + 30176 + 17813 + 16106 = $84,686 Mil.
Total Current Assets was $101,990 Mil.
Total Assets was $334,532 Mil.
Property, Plant and Equipment(Net PPE) was $27,163 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,393 Mil.
Selling, General & Admin. Expense(SGA) was $14,587 Mil.
Total Current Liabilities was $73,342 Mil.
Long-Term Debt was $84,531 Mil.
Net Income was 11029 + 17891 + 9014 + 7796 = $45,730 Mil.
Non Operating Income was -165 + 122 + -159 + -263 = $-465 Mil.
Cash Flow from Operations was 12523 + 27056 + 16126 + 10634 = $66,339 Mil.
Accounts Receivable was $12,229 Mil.
Revenue was 50557 + 75872 + 51501 + 49605 = $227,535 Mil.
Gross Profit was 19921 + 30423 + 20548 + 19681 = $90,573 Mil.
Total Current Assets was $87,592 Mil.
Total Assets was $305,277 Mil.
Property, Plant and Equipment(Net PPE) was $23,203 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,634 Mil.
Selling, General & Admin. Expense(SGA) was $14,540 Mil.
Total Current Liabilities was $68,265 Mil.
Long-Term Debt was $69,374 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)
=(11579 / 220457) / (12229 / 227535)
=0.05252271 / 0.05374558
=0.9772

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)
=(90573 / 227535) / (84686 / 220457)
=0.39806184 / 0.3841384
=1.0362

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 - (101990 + 27163) / 334532) / (1 - (87592 + 23203) / 305277)
=0.61392931 / 0.63706732
=0.9637

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
=220457 / 227535
=0.9689

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))
=(11634 / (11634 + 23203)) / (10393 / (10393 + 27163))
=0.33395528 / 0.27673341
=1.2068

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)
=(14587 / 220457) / (14540 / 227535)
=0.0661671 / 0.06390226
=1.0354

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)
=((84531 + 73342) / 334532) / ((69374 + 68265) / 305277)
=0.47192197 / 0.45086593
=1.0467

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
=(45730 - -465 - 66339) / 334532
=-0.0602

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.

Apple Inc 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 local exchange's currency.

Apple Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.02750.96991.21261.07840.58711.4081.09771.2460.75481.0134
GMI 0.87380.94230.87691.01940.97280.92271.1660.9750.96331.0252
AQI 0.74791.66762.66661.39751.431.06990.96751.08780.99890.9497
SGI 1.27251.52541.14441.52021.65961.44581.0921.06951.27860.9227
DEPI 1.01280.87760.84451.1230.9371.0810.60471.04030.83331.1919
SGAI 0.95710.83210.9640.87470.82990.91380.98781.03540.93451.0736
LVGI 0.97540.85610.77121.13790.8720.91081.33771.36151.1571.0407
TATA -0.044-0.1133-0.0474-0.063-0.1033-0.0486-0.0788-0.0853-0.0929-0.0589
M-score -2.57-2.27-1.71-2.08-2.53-1.89-2.76-2.69-2.97-2.82

Apple Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.02470.93280.76330.75480.65911.04571.15041.01341.16920.9772
GMI 0.9530.95520.96690.96330.97810.99631.00551.02521.04191.0362
AQI 1.05091.13491.07670.99891.10010.9610.92020.94970.91540.9637
SGI 1.14831.20521.25931.27861.17611.07240.9820.92270.92820.9689
DEPI 1.10151.07730.94680.83330.84920.92231.06631.19191.20551.2068
SGAI 0.98890.95930.9510.93450.98841.03751.06531.07361.05631.0354
LVGI 1.291.2951.22041.1571.0881.19191.11371.04071.08021.0467
TATA -0.0978-0.106-0.1078-0.0929-0.0698-0.0516-0.0464-0.0589-0.0586-0.0602
M-score -2.87-2.90-3.03-2.97-2.98-2.71-2.64-2.82-2.69-2.80
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