Switch to:
GuruFocus has detected 4 Warning Signs with Alphabet Inc $GOOG.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Alphabet Inc (NAS:GOOG)
Beneish M-Score
-2.76 (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.

Alphabet Inc has a M-score of -2.76 suggests that the company is not a manipulator.

GOOG' s Beneish M-Score Range Over the Past 10 Years
Min: -2.98   Max: -0.06
Current: -2.76

-2.98
-0.06

During the past 13 years, the highest Beneish M-Score of Alphabet Inc was -0.06. The lowest was -2.98. And the median was -2.62.


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 Alphabet 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 * 0.9823+0.528 * 1.026+0.404 * 0.8485+0.892 * 1.2151+0.115 * 0.9983
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9639+4.679 * -0.0983-0.327 * 0.8457
=-2.76

* 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 $12,913 Mil.
Revenue was 24750 + 26064 + 22451 + 21500 = $94,765 Mil.
Gross Profit was 14955 + 15403 + 13752 + 13370 = $57,480 Mil.
Total Current Assets was $108,794 Mil.
Total Assets was $172,756 Mil.
Property, Plant and Equipment(Net PPE) was $35,936 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,276 Mil.
Selling, General & Admin. Expense(SGA) was $18,015 Mil.
Total Current Liabilities was $15,256 Mil.
Long-Term Debt was $3,937 Mil.
Net Income was 5426 + 5333 + 5061 + 4877 = $20,697 Mil.
Non Operating Income was -36 + -74 + -11 + -124 = $-245 Mil.
Cash Flow from Operations was 9548 + 9413 + 9845 + 9120 = $37,926 Mil.
Accounts Receivable was $10,818 Mil.
Revenue was 20257 + 21329 + 18675 + 17727 = $77,988 Mil.
Gross Profit was 12609 + 13141 + 11638 + 11144 = $48,532 Mil.
Total Current Assets was $90,955 Mil.
Total Assets was $149,747 Mil.
Property, Plant and Equipment(Net PPE) was $30,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,257 Mil.
Selling, General & Admin. Expense(SGA) was $15,381 Mil.
Total Current Liabilities was $17,684 Mil.
Long-Term Debt was $1,987 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)
=(12913 / 94765) / (10818 / 77988)
=0.13626339 / 0.13871365
=0.9823

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)
=(48532 / 77988) / (57480 / 94765)
=0.62230087 / 0.60655305
=1.026

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 - (108794 + 35936) / 172756) / (1 - (90955 + 30162) / 149747)
=0.16222881 / 0.19118914
=0.8485

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
=94765 / 77988
=1.2151

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))
=(5257 / (5257 + 30162)) / (6276 / (6276 + 35936))
=0.14842316 / 0.1486781
=0.9983

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)
=(18015 / 94765) / (15381 / 77988)
=0.19010183 / 0.19722265
=0.9639

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)
=((3937 + 15256) / 172756) / ((1987 + 17684) / 149747)
=0.11109889 / 0.13136156
=0.8457

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
=(20697 - -245 - 37926) / 172756
=-0.0983

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.

Alphabet Inc has a M-score of -2.76 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.

Alphabet Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.04510.93021.10841.07920.98731.19620.93410.88861.0841.0162
GMI 1.00380.99150.96550.97110.98881.04011.03820.98870.97811.0224
AQI 0.96171.26490.80040.92080.95441.62810.84641.06370.93140.8656
SGI 1.56471.31351.08511.23971.29271.21461.20591.18881.13621.2038
DEPI 0.99740.86770.93091.56920.94360.80831.03861.11581.16120.9764
SGAI 1.09371.04150.89721.05211.18741.00781.01831.07060.95570.9558
LVGI 1.13770.90190.9362.54730.94891.12650.88560.94680.93290.855
TATA -0.0632-0.0774-0.065-0.0418-0.0642-0.0629-0.0517-0.0691-0.0652-0.0949
M-score -2.31-2.51-2.68-2.89-2.58-2.19-2.60-2.70-2.58-2.72

Alphabet Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.88860.93750.98661.0491.0841.09621.05911.03091.01620.9823
GMI 0.98870.98540.98590.97020.97810.9890.99631.01151.02241.026
AQI 1.06371.03460.99970.98320.93140.92280.93240.92830.86560.8485
SGI 1.18881.16991.14421.12831.13621.14961.17451.19191.20381.2151
DEPI 1.11581.12871.08851.24611.16121.11931.08580.97560.97640.9983
SGAI 1.07061.0521.03111.00790.95570.92490.92340.93340.95580.9639
LVGI 0.94680.78650.84410.8430.93290.99780.88760.80550.8550.8457
TATA -0.0691-0.082-0.0846-0.0737-0.0652-0.0631-0.068-0.0822-0.0949-0.0983
M-score -2.70-2.69-2.71-2.61-2.58-2.56-2.56-2.62-2.72-2.76
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK