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GuruFocus has detected 4 Warning Signs with AbbVie Inc $ABBV.
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AbbVie Inc (NYSE:ABBV)
Beneish M-Score
-2.42 (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.

AbbVie Inc has a M-score of -2.42 suggests that the company is not a manipulator.

ABBV' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -2
Current: -2.42

-2.93
-2

During the past 8 years, the highest Beneish M-Score of AbbVie Inc was -2.00. The lowest was -2.93. And the median was -2.42.


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 AbbVie 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 * 0.8924+0.528 * 1.0321+0.404 * 1.1265+0.892 * 1.1027+0.115 * 0.8056
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8489+4.679 * -0.0059-0.327 * 0.9244
=-2.42

* 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 $4,677 Mil.
Revenue was 6538 + 6796 + 6432 + 6452 = $26,218 Mil.
Gross Profit was 4922 + 5241 + 4928 + 5047 = $20,138 Mil.
Total Current Assets was $15,547 Mil.
Total Assets was $65,664 Mil.
Property, Plant and Equipment(Net PPE) was $2,612 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,295 Mil.
Selling, General & Admin. Expense(SGA) was $5,868 Mil.
Total Current Liabilities was $8,844 Mil.
Long-Term Debt was $36,526 Mil.
Net Income was 1711 + 1391 + 1598 + 1610 = $6,310 Mil.
Non Operating Income was -86 + -70 + -97 + -66 = $-319 Mil.
Cash Flow from Operations was 2102 + 1541 + 1454 + 1918 = $7,015 Mil.
Accounts Receivable was $4,753 Mil.
Revenue was 5958 + 6400 + 5944 + 5475 = $23,777 Mil.
Gross Profit was 4589 + 4925 + 4777 + 4559 = $18,850 Mil.
Total Current Assets was $16,622 Mil.
Total Assets was $53,720 Mil.
Property, Plant and Equipment(Net PPE) was $2,597 Mil.
Depreciation, Depletion and Amortization(DDA) was $946 Mil.
Selling, General & Admin. Expense(SGA) was $6,269 Mil.
Total Current Liabilities was $10,662 Mil.
Long-Term Debt was $29,490 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)
=(4677 / 26218) / (4753 / 23777)
=0.17838889 / 0.19989906
=0.8924

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)
=(18850 / 23777) / (20138 / 26218)
=0.79278294 / 0.76809825
=1.0321

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 - (15547 + 2612) / 65664) / (1 - (16622 + 2597) / 53720)
=0.72345577 / 0.64223753
=1.1265

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
=26218 / 23777
=1.1027

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))
=(946 / (946 + 2597)) / (1295 / (1295 + 2612))
=0.26700536 / 0.33145636
=0.8056

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)
=(5868 / 26218) / (6269 / 23777)
=0.2238157 / 0.26365816
=0.8489

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)
=((36526 + 8844) / 65664) / ((29490 + 10662) / 53720)
=0.69094176 / 0.74743112
=0.9244

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
=(6310 - -319 - 7015) / 65664
=-0.0059

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.

AbbVie Inc has a M-score of -2.42 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.

AbbVie Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.09310.73211.10580.8969
GMI 0.99810.97170.9691.0397
AQI 0.89011.04891.98081.1111
SGI 1.02231.06231.14521.1216
DEPI 1.20581.16840.97760.7842
SGAI 1.04941.35860.7220.8173
LVGI 0.91481.09930.94910.9243
TATA -0.0714-0.0409-0.0412-0.0084
M-score -2.71-2.93-2.00-2.41

AbbVie Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.73210.88341.05151.02521.10580.93790.980.94870.89690.8924
GMI 0.97170.96310.94520.94480.9690.9981.03181.05021.03971.0321
AQI 1.04891.05722.09672.10671.98081.93531.11151.1421.11111.1265
SGI 1.06231.07431.08971.11681.14521.16341.17951.1521.12161.1027
DEPI 1.16841.1571.14911.0610.97760.87850.79060.77660.78420.8056
SGAI 1.35861.34071.35421.22710.7220.68580.63040.64510.81730.8489
LVGI 1.09931.13230.99560.98780.94910.91820.9730.95030.92430.9244
TATA -0.0409-0.0703-0.0321-0.0268-0.0412-0.0421-0.0304-0.0139-0.0084-0.0059
M-score -2.93-2.93-2.13-2.09-2.00-2.14-2.37-2.32-2.41-2.42
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