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GuruFocus has detected 6 Warning Signs with Danaher Corp $DHR.
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Danaher Corp (NYSE:DHR)
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.

Danaher Corp has a M-score of -2.75 suggests that the company is not a manipulator.

DHR' s Beneish M-Score Range Over the Past 10 Years
Min: -2.89   Max: -2.13
Current: -2.75

-2.89
-2.13

During the past 13 years, the highest Beneish M-Score of Danaher Corp was -2.13. The lowest was -2.89. 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 Danaher Corp 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 * 0.7007+0.528 * 0.9764+0.404 * 1.0341+0.892 * 1.1189+0.115 * 0.7394
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0229+4.679 * -0.0183-0.327 * 0.9605
=-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 (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $3,035 Mil.
Revenue was 4205.7 + 4584.3 + 4132.1 + 5785 = $18,707 Mil.
Gross Profit was 2334.3 + 2500 + 2286 + 3149.4 = $10,270 Mil.
Total Current Assets was $6,319 Mil.
Total Assets was $45,245 Mil.
Property, Plant and Equipment(Net PPE) was $2,409 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,166 Mil.
Selling, General & Admin. Expense(SGA) was $6,071 Mil.
Total Current Liabilities was $6,003 Mil.
Long-Term Debt was $9,729 Mil.
Net Income was 506.1 + 747 + 391.6 + 656.7 = $2,301 Mil.
Non Operating Income was 0 + 0 + -178.8 + 0 = $-179 Mil.
Cash Flow from Operations was 560.2 + 649 + 818.2 + 1281.8 = $3,309 Mil.
Accounts Receivable was $3,871 Mil.
Revenue was 3924.1 + 4323 + 3512.2 + 4960.2 = $16,720 Mil.
Gross Profit was 2167.3 + 2257.2 + 1893.4 + 2644 = $8,962 Mil.
Total Current Assets was $7,747 Mil.
Total Assets was $48,386 Mil.
Property, Plant and Equipment(Net PPE) was $2,873 Mil.
Depreciation, Depletion and Amortization(DDA) was $913 Mil.
Selling, General & Admin. Expense(SGA) was $5,304 Mil.
Total Current Liabilities was $5,321 Mil.
Long-Term Debt was $12,195 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)
=(3034.9 / 18707.1) / (3871.2 / 16719.5)
=0.16223252 / 0.23153802
=0.7007

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)
=(8961.9 / 16719.5) / (10269.7 / 18707.1)
=0.53601483 / 0.54897338
=0.9764

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 - (6318.9 + 2408.7) / 45245.1) / (1 - (7747.2 + 2872.5) / 48385.6)
=0.80710397 / 0.78051941
=1.0341

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
=18707.1 / 16719.5
=1.1189

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))
=(913 / (913 + 2872.5)) / (1166 / (1166 + 2408.7))
=0.24118346 / 0.32618122
=0.7394

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)
=(6070.5 / 18707.1) / (5303.8 / 16719.5)
=0.32450246 / 0.3172224
=1.0229

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)
=((9729.3 + 6003.1) / 45245.1) / ((12194.7 + 5321.3) / 48385.6)
=0.347715 / 0.36200853
=0.9605

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
=(2301.4 - -178.8 - 3309.2) / 45245.1
=-0.0183

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.

Danaher Corp 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.

Danaher Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03250.8321.14861.03171.0720.9441.05511.37540.65731.0131
GMI 0.96910.97640.9910.92511.00420.98571.0090.94911.01660.9659
AQI 1.05930.98930.96851.01961.04640.97810.95561.01921.15071.0141
SGI 1.16141.14750.88091.1221.28211.13491.00120.72581.3181.0535
DEPI 1.02030.8321.01860.92081.07640.82381.01421.1180.89810.854
SGAI 0.98281.02231.08261.00670.99730.99080.98641.12650.97731.049
LVGI 0.94940.84070.95180.95051.14270.92030.7971.03541.58650.9682
TATA -0.0158-0.031-0.0331-0.0262-0.0141-0.031-0.0381-0.0347-0.0095-0.0224
M-score -2.35-2.64-2.62-2.49-2.24-2.57-2.55-2.58-2.69-2.55

Danaher Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.37541.38251.38231.73110.65730.89360.84940.52581.01310.7007
GMI 0.94910.95090.94840.93681.01661.00421.0011.00830.96590.9764
AQI 1.01921.04211.01461.16121.15071.1191.06951.03141.01411.0341
SGI 0.72580.7190.71010.6451.3181.25691.31921.50071.05351.1189
DEPI 1.1181.10951.11421.47590.89811.05490.92950.58690.8540.7394
SGAI 1.12651.14271.14771.2360.97730.99361.01070.93241.0491.0229
LVGI 1.03541.00661.05241.93711.58651.6311.77430.73280.96820.9605
TATA -0.0347-0.0362-0.037-0.0112-0.0095-0.0153-0.0188-0.04-0.0224-0.0183
M-score -2.58-2.57-2.61-2.44-2.69-2.57-2.66-2.59-2.55-2.75
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