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GuruFocus has detected 5 Warning Signs with Accenture PLC $ACN.
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Accenture PLC (NYSE:ACN)
Beneish M-Score
-2.75 (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.

Accenture PLC has a M-score of -2.75 suggests that the company is not a manipulator.

ACN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.71   Max: -1.39
Current: -2.75

-3.71
-1.39

During the past 13 years, the highest Beneish M-Score of Accenture PLC was -1.39. The lowest was -3.71. And the median was -2.75.


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 Accenture PLC 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 * 0.9851+0.528 * 0.9896+0.404 * 1.199+0.892 * 1.0554+0.115 * 1.0528
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0963+4.679 * -0.0783-0.327 * 1.0179
=-2.75

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

This Year (May17) TTM:Last Year (May16) TTM:
Accounts Receivable was $4,474 Mil.
Revenue was 9356.787 + 8762.182 + 9005.603 + 8965.58 = $36,090 Mil.
Gross Profit was 2909.631 + 2504.156 + 2730.032 + 2655.54 = $10,799 Mil.
Total Current Assets was $11,206 Mil.
Total Assets was $21,136 Mil.
Property, Plant and Equipment(Net PPE) was $1,041 Mil.
Depreciation, Depletion and Amortization(DDA) was $763 Mil.
Selling, General & Admin. Expense(SGA) was $6,268 Mil.
Total Current Liabilities was $9,154 Mil.
Long-Term Debt was $25 Mil.
Net Income was 669.468 + 838.752 + 1004.476 + 1069.226 = $3,582 Mil.
Non Operating Income was 4.029 + -24.895 + -6.087 + 258.715 = $232 Mil.
Cash Flow from Operations was 1792.572 + 154.703 + 1083.882 + 1973.674 = $5,005 Mil.
Accounts Receivable was $4,304 Mil.
Revenue was 8969.044 + 8397.053 + 8465.984 + 8364.511 = $34,197 Mil.
Gross Profit was 2689.552 + 2369.816 + 2562.519 + 2504.405 = $10,126 Mil.
Total Current Assets was $11,576 Mil.
Total Assets was $19,191 Mil.
Property, Plant and Equipment(Net PPE) was $884 Mil.
Depreciation, Depletion and Amortization(DDA) was $709 Mil.
Selling, General & Admin. Expense(SGA) was $5,417 Mil.
Total Current Liabilities was $8,161 Mil.
Long-Term Debt was $27 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)
=(4474.415 / 36090.152) / (4303.642 / 34196.592)
=0.12397884 / 0.12585003
=0.9851

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)
=(10126.292 / 34196.592) / (10799.359 / 36090.152)
=0.29611992 / 0.29923285
=0.9896

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 - (11205.735 + 1041.006) / 21135.592) / (1 - (11576.011 + 883.609) / 19191.047)
=0.42056314 / 0.35075872
=1.199

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
=36090.152 / 34196.592
=1.0554

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))
=(709.4 / (709.4 + 883.609)) / (763.135 / (763.135 + 1041.006))
=0.44532077 / 0.42299078
=1.0528

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)
=(6268.114 / 36090.152) / (5417.437 / 34196.592)
=0.17367935 / 0.15842038
=1.0963

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)
=((24.732 + 9154.325) / 21135.592) / ((26.801 + 8161.133) / 19191.047)
=0.43429382 / 0.42665385
=1.0179

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
=(3581.922 - 231.762 - 5004.831) / 21135.592
=-0.0783

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.

Accenture PLC has a M-score of -2.75 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.

Accenture PLC Annual Data

Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14Aug15Aug16
DSRI 1.01281.03440.81340.75651.0780.87451.05991.10420.96371.0028
GMI 0.97280.99210.96140.94041.0241.01590.97761.01621.01951.0091
AQI 1.10141.07441.06340.97271.08550.89591.27121.161.26141.0118
SGI 1.17691.180.91530.99671.18441.08871.02071.04871.03261.0572
DEPI 0.86180.93270.91550.9931.05880.91441.00060.98420.98391.0315
SGAI 0.93510.99871.0391.09950.95910.95591.01860.96870.96330.9624
LVGI 1.06130.85240.92151.00530.9820.96820.99750.94051.0250.9234
TATA -0.1288-0.09-0.128-0.1009-0.075-0.1025-0.0002-0.0295-0.0546-0.0603
M-score -2.91-2.64-3.31-3.24-2.53-3.02-2.31-2.38-2.63-2.66

Accenture PLC Quarterly Data

Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17May17
DSRI 0.64730.63310.96371.05431.05761.11111.00280.98961.04810.9851
GMI 1.03651.03171.01951.01311.00381.00571.00911.00691.00340.9896
AQI 1.02471.06071.26141.21091.17751.10651.01181.09191.14081.199
SGI 1.07131.05411.03261.01911.0221.0421.05721.06961.06571.0554
DEPI 0.91290.95360.98391.02891.06151.02891.03151.0221.01581.0528
SGAI 0.92510.9440.96330.97870.99820.97140.96240.96290.96991.0963
LVGI 0.98981.01741.0251.01990.94610.93290.92340.95230.99631.0179
TATA -0.066-0.0692-0.0546-0.0436-0.0421-0.0432-0.0603-0.0727-0.0602-0.0783
M-score -3.01-3.05-2.63-2.52-2.51-2.47-2.66-2.70-2.59-2.75
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