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GuruFocus has detected 2 Warning Signs with American Express Co $AXP.
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American Express Co (NYSE:AXP)
Beneish M-Score
-2.49 (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.

American Express Co has a M-score of -2.49 suggests that the company is not a manipulator.

AXP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Max: -0.49
Current: -2.49

-3.52
-0.49

During the past 13 years, the highest Beneish M-Score of American Express Co was -0.49. The lowest was -3.52. And the median was -2.55.


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 American Express Co 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 * 1.1056+0.528 * 1+0.404 * 0.9985+0.892 * 0.9686+0.115 * 0.9988
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0625+4.679 * -0.0101-0.327 * 1.0743
=-2.49

* 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 $49,966 Mil.
Revenue was 7889 + 8022 + 7774 + 8235 = $31,920 Mil.
Gross Profit was 7889 + 8022 + 7774 + 8235 = $31,920 Mil.
Total Current Assets was $0 Mil.
Total Assets was $161,385 Mil.
Property, Plant and Equipment(Net PPE) was $4,433 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,130 Mil.
Selling, General & Admin. Expense(SGA) was $17,159 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $51,647 Mil.
Net Income was 1237 + 825 + 1142 + 2015 = $5,219 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1160 + 3338 + 1748 + 609 = $6,855 Mil.
Accounts Receivable was $46,660 Mil.
Revenue was 8088 + 8391 + 8193 + 8284 = $32,956 Mil.
Gross Profit was 8088 + 8391 + 8193 + 8284 = $32,956 Mil.
Total Current Assets was $0 Mil.
Total Assets was $158,816 Mil.
Property, Plant and Equipment(Net PPE) was $4,137 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,053 Mil.
Selling, General & Admin. Expense(SGA) was $16,674 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $47,311 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)
=(49966 / 31920) / (46660 / 32956)
=1.56535088 / 1.41582716
=1.1056

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)
=(32956 / 32956) / (31920 / 31920)
=1 / 1
=1

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 - (0 + 4433) / 161385) / (1 - (0 + 4137) / 158816)
=0.97253152 / 0.97395099
=0.9985

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
=31920 / 32956
=0.9686

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))
=(1053 / (1053 + 4137)) / (1130 / (1130 + 4433))
=0.20289017 / 0.20312781
=0.9988

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)
=(17159 / 31920) / (16674 / 32956)
=0.53756266 / 0.50594732
=1.0625

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)
=((51647 + 0) / 161385) / ((47311 + 0) / 158816)
=0.32002355 / 0.2978982
=1.0743

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
=(5219 - 0 - 6855) / 161385
=-0.0101

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.

American Express Co has a M-score of -2.49 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.

American Express Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.97090.8521.20830.9411.00420.98840.98660.95771.0351.0957
GMI 1111111111
AQI 1.00030.99451.00121.00250.99780.99820.99841.00050.99920.9975
SGI 1.11871.02210.86461.12471.08631.05321.04171.04010.95990.9787
DEPI 1.05940.99730.70031.15781.11991.00011.02811.01921.00971.0222
SGAI 1.05990.95550.9841.11141.04140.95940.96561.02540.97671.0648
LVGI 1.10841.28990.87821.08260.8580.99130.93681.00970.81860.9918
TATA -0.0299-0.0402-0.0336-0.0318-0.0315-0.017-0.0208-0.0321-0.0338-0.0177
M-score -2.58-2.87-2.56-2.60-2.49-2.51-2.52-2.64-2.58-2.50

American Express Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.95770.94040.96960.9821.0351.05391.02661.05191.09571.1056
GMI 1111111111
AQI 1.00051.00020.99980.99930.99920.99940.99920.99810.99750.9985
SGI 1.04011.02421.00210.99870.95990.97030.97890.96960.97870.9686
DEPI 1.01921.01751.05161.01691.00971.00880.99611.01751.02220.9988
SGAI 1.02541.02921.00281.03120.97670.98651.01731.01081.06481.0625
LVGI 1.00970.99060.93260.87130.81860.84220.94540.92780.99181.0743
TATA -0.0321-0.0249-0.0281-0.0293-0.0338-0.0375-0.0245-0.0143-0.0177-0.0101
M-score -2.64-2.63-2.61-2.60-2.58-2.58-2.57-2.50-2.50-2.49
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