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Beneish M-Score -0.59 higher than -2.22, which implies that it might have manipulated its financial results.
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.
During the past 13 years, the highest Beneish M-Score of Analog Devices Inc was -0.59. The lowest was -3.49. And the median was -2.62.
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 Analog Devices 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 * 1.0738||+||0.528 * 1.0133||+||0.404 * 5.6494||+||0.892 * 1.1397||+||0.115 * 0.7883|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0539||+||4.679 * -0.0329||-||0.327 * 1.015|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $402 Mil.|
Revenue was 771.986 + 814.247 + 727.752 + 694.536 = $3,009 Mil.
Gross Profit was 503.607 + 486.037 + 476.29 + 458.743 = $1,925 Mil.
Total Current Assets was $3,803 Mil.
Total Assets was $6,821 Mil.
Property, Plant and Equipment(Net PPE) was $612 Mil.
Depreciation, Depletion and Amortization(DDA) was $171 Mil.
Selling, General & Admin. Expense(SGA) was $477 Mil.
Total Current Liabilities was $633 Mil.
Long-Term Debt was $873 Mil.
Net Income was 178.757 + 108.695 + 180.606 + 187.433 = $655 Mil.
Non Operating Income was -2.552 + -0.116 + -0.422 + 0.441 = $-3 Mil.
Cash Flow from Operations was 168.653 + 262.263 + 213.442 + 238.424 = $883 Mil.
|Accounts Receivable was $329 Mil.
Revenue was 628.238 + 678.133 + 674.172 + 659.25 = $2,640 Mil.
Gross Profit was 409.118 + 444.87 + 435.062 + 422.195 = $1,711 Mil.
Total Current Assets was $5,471 Mil.
Total Assets was $6,399 Mil.
Property, Plant and Equipment(Net PPE) was $529 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $397 Mil.
Total Current Liabilities was $519 Mil.
Long-Term Debt was $872 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(402.35 / 3008.521)||/||(328.787 / 2639.793)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(486.037 / 2639.793)||/||(503.607 / 3008.521)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3803.037 + 612.472) / 6821.156)||/||(1 - (5470.959 + 529.01) / 6399.468)|
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.
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))|
|=||(109.996 / (109.996 + 529.01))||/||(171.092 / (171.092 + 612.472))|
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)|
|=||(476.669 / 3008.521)||/||(396.851 / 2639.793)|
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)|
|=||((872.926 + 632.909) / 6821.156)||/||((872.378 + 519.494) / 6399.468)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(655.491 - -2.649||-||882.782)||/||6821.156|
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.
Analog Devices Inc has a M-score of -0.59 signals that the company is likely to be a manipulator.
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
Analog Devices Inc Annual Data
Analog Devices Inc Quarterly Data