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GuruFocus has detected 6 Warning Signs with Thermo Fisher Scientific Inc $TMO.
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Thermo Fisher Scientific Inc (NYSE:TMO)
Beneish M-Score
-2.47 (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.

Thermo Fisher Scientific Inc has a M-score of -2.47 suggests that the company is not a manipulator.

TMO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.01   Max: -0.55
Current: -2.47

-3.01
-0.55

During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -0.55. The lowest was -3.01. And the median was -2.52.


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 Thermo Fisher Scientific 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 * 1.0736+0.528 * 0.9914+0.404 * 0.9971+0.892 * 1.0809+0.115 * 0.9789
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0054+4.679 * -0.0227-0.327 * 1.0595
=-2.47

* 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 $3,097 Mil.
Revenue was 4765 + 4953.2 + 4490.9 + 4535.2 = $18,744 Mil.
Gross Profit was 2192.5 + 2278.8 + 2053.9 + 2078.5 = $8,604 Mil.
Total Current Assets was $7,248 Mil.
Total Assets was $46,214 Mil.
Property, Plant and Equipment(Net PPE) was $2,563 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,806 Mil.
Selling, General & Admin. Expense(SGA) was $5,094 Mil.
Total Current Liabilities was $5,303 Mil.
Long-Term Debt was $15,188 Mil.
Net Income was 551.4 + 629.5 + 473.5 + 516.6 = $2,171 Mil.
Non Operating Income was -2.6 + 16.6 + -10.3 + -10.9 = $-7 Mil.
Cash Flow from Operations was 361.5 + 1205.9 + 771.8 + 889.5 = $3,229 Mil.
Accounts Receivable was $2,668 Mil.
Revenue was 4294.8 + 4652.5 + 4123.2 + 4270.9 = $17,341 Mil.
Gross Profit was 1957.9 + 2108.3 + 1883.3 + 1941.8 = $7,891 Mil.
Total Current Assets was $6,539 Mil.
Total Assets was $42,953 Mil.
Property, Plant and Equipment(Net PPE) was $2,483 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,688 Mil.
Selling, General & Admin. Expense(SGA) was $4,688 Mil.
Total Current Liabilities was $6,323 Mil.
Long-Term Debt was $11,653 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)
=(3096.5 / 18744.3) / (2668.3 / 17341.4)
=0.16519689 / 0.15386878
=1.0736

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)
=(7891.3 / 17341.4) / (8603.7 / 18744.3)
=0.45505553 / 0.45900354
=0.9914

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 - (7248.1 + 2563.3) / 46213.6) / (1 - (6539 + 2483.1) / 42952.7)
=0.78769453 / 0.78995267
=0.9971

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
=18744.3 / 17341.4
=1.0809

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))
=(1688 / (1688 + 2483.1)) / (1806.4 / (1806.4 + 2563.3))
=0.40468941 / 0.41339222
=0.9789

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)
=(5094.2 / 18744.3) / (4687.6 / 17341.4)
=0.27177329 / 0.27031266
=1.0054

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)
=((15188.4 + 5302.9) / 46213.6) / ((11653 + 6322.8) / 42952.7)
=0.44340411 / 0.41850221
=1.0595

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
=(2171 - -7.2 - 3228.7) / 46213.6
=-0.0227

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.

Thermo Fisher Scientific Inc has a M-score of -2.47 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.

Thermo Fisher Scientific Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.4050.94640.99031.00831.10040.92931.0320.98711.02421.1121
GMI 1.05950.97421.00650.96761.00240.97260.99910.95220.97030.9982
AQI 0.99820.95580.99371.01581.02461.00310.83381.24641.01130.989
SGI 2.57051.07710.9631.06721.08691.07061.04281.29021.00451.0771
DEPI 0.430.97541.03251.05041.03130.94411.00460.88171.00421.0064
SGAI 0.89330.98061.02930.99231.01781.0040.98341.10110.93781.0016
LVGI 0.91340.91291.00831.02271.8861.0061.19181.04250.92491.1539
TATA -0.0341-0.0201-0.0365-0.0203-0.0146-0.0315-0.0214-0.0173-0.0202-0.0246
M-score -1.77-2.56-2.70-2.52-2.66-2.65-2.64-2.28-2.52-2.48

Thermo Fisher Scientific Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.98710.76880.87350.95781.02421.02490.98571.06411.11211.0736
GMI 0.95220.92530.91520.9420.97031.00021.01361.00960.99820.9914
AQI 1.24641.00980.9790.98241.01130.99320.99880.97430.9890.9971
SGI 1.29021.22481.13231.05941.00451.02581.04461.06951.07711.0809
DEPI 0.88170.73420.82690.92891.00421.0411.01681.04461.00640.9789
SGAI 1.10111.04521.00480.96470.93780.94090.95850.98371.00161.0054
LVGI 1.04250.93990.94910.94340.92490.99771.0121.18821.15391.0595
TATA -0.0173-0.0208-0.0123-0.0139-0.0202-0.0238-0.0267-0.0239-0.0246-0.0227
M-score -2.28-2.64-2.59-2.55-2.52-2.53-2.57-2.53-2.48-2.47
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