Switch to:
GuruFocus has detected 5 Warning Signs with HP Inc $HPQ.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
HP Inc (NYSE:HPQ)
Beneish M-Score
-2.29 (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.

HP Inc has a M-score of -2.29 suggests that the company is not a manipulator.

HPQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.89   Max: 0.83
Current: -2.29

-3.89
0.83

During the past 13 years, the highest Beneish M-Score of HP Inc was 0.83. The lowest was -3.89. And the median was -2.56.


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 HP 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 * 0.9511+0.528 * 1.0358+0.404 * 0.906+0.892 * 1.0209+0.115 * 3.4203
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8884+4.679 * -0.0174-0.327 * 0.9556
=-2.29

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $3,771 Mil.
Revenue was 12385 + 12684 + 12512 + 11892 = $49,473 Mil.
Gross Profit was 2383 + 2248 + 2291 + 2172 = $9,094 Mil.
Total Current Assets was $18,302 Mil.
Total Assets was $28,686 Mil.
Property, Plant and Equipment(Net PPE) was $1,661 Mil.
Depreciation, Depletion and Amortization(DDA) was $341 Mil.
Selling, General & Admin. Expense(SGA) was $3,908 Mil.
Total Current Liabilities was $18,604 Mil.
Long-Term Debt was $6,710 Mil.
Net Income was 559 + 611 + 492 + 783 = $2,445 Mil.
Non Operating Income was -160 + 0 + 156 + -36 = $-40 Mil.
Cash Flow from Operations was 455 + 767 + 698 + 1065 = $2,985 Mil.
Accounts Receivable was $3,884 Mil.
Revenue was 11588 + 12246 + 12266 + 12362 = $48,462 Mil.
Gross Profit was 2250 + 2285 + 2366 + 2326 = $9,227 Mil.
Total Current Assets was $15,385 Mil.
Total Assets was $25,523 Mil.
Property, Plant and Equipment(Net PPE) was $1,572 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,194 Mil.
Selling, General & Admin. Expense(SGA) was $4,309 Mil.
Total Current Liabilities was $16,862 Mil.
Long-Term Debt was $6,708 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)
=(3771 / 49473) / (3884 / 48462)
=0.07622339 / 0.08014527
=0.9511

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)
=(9227 / 48462) / (9094 / 49473)
=0.1903966 / 0.18381744
=1.0358

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 - (18302 + 1661) / 28686) / (1 - (15385 + 1572) / 25523)
=0.30408562 / 0.33561885
=0.906

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
=49473 / 48462
=1.0209

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))
=(2194 / (2194 + 1572)) / (341 / (341 + 1661))
=0.58258099 / 0.17032967
=3.4203

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)
=(3908 / 49473) / (4309 / 48462)
=0.07899258 / 0.08891503
=0.8884

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)
=((6710 + 18604) / 28686) / ((6708 + 16862) / 25523)
=0.88245137 / 0.92348078
=0.9556

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
=(2445 - -40 - 2985) / 28686
=-0.0174

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.

HP Inc has a M-score of -2.29 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.

HP Inc Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
DSRI 1.08481.11141.00941.01580.97670.95181.03711.72710.3840.9096
GMI 0.97551.02871.02440.99031.01651.00861.0071.16531.02551.0354
AQI 1.1531.1860.99171.05871.08680.83060.97740.97421.24060.6053
SGI 1.13781.1350.96781.10021.00960.94590.9330.50450.90840.9373
DEPI 0.99131.08930.79351.02511.00750.96541.04181.03740.37814.5553
SGAI 0.95310.95710.90421.00351.04881.05121.05330.8010.96920.868
LVGI 1.06691.07190.92811.04631.08521.11670.93410.98510.78941.9275
TATA -0.0326-0.0546-0.0498-0.0254-0.043-0.2131-0.0615-0.0704-0.0183-0.0294
M-score -2.40-2.43-2.71-2.49-2.69-3.68-2.78-2.46-3.10-2.77

HP Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 2.41173.44077.8720.3840.28430.18230.08380.90960.86580.9511
GMI 1.31251.898-3.57211.02550.92380.6455-0.34751.03541.03941.0358
AQI 1.00630.99570.99931.24060.83860.820.73390.60530.89020.906
SGI 0.37790.25060.11410.90841.1771.72943.74940.93730.97641.0209
DEPI 1.03811.03241.01660.37810.41440.47070.6214.55534.11283.4203
SGAI 0.67740.3651-0.73580.96921.14232.0592-0.94540.8680.86270.8884
LVGI 0.98210.99451.02690.78941.59551.59651.541.92750.97580.9556
TATA -0.0503-0.0376-0.0203-0.0183-0.0739-0.0929-0.0638-0.0294-0.0604-0.0174
M-score -1.74-0.490.83-3.10-3.72-3.71-1.87-2.77-2.54-2.29
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