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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-2.31 (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.

Analog Devices Inc has a M-score of -2.31 suggests that the company is not a manipulator.

ADI' s 10-Year Beneish M-Score Range
Min: -3.49   Max: -0.59
Current: -2.31

-3.49
-0.59

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.


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 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 * 0.9542+0.528 * 1.0194+0.404 * 1.2133+0.892 * 1.1986+0.115 * 0.5859
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9262+4.679 * -0.0364-0.327 * 0.56
=-2.31

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jul15) TTM:Last Year (Jul14) TTM:
Accounts Receivable was $452 Mil.
Revenue was 863.365 + 821.019 + 771.986 + 814.247 = $3,271 Mil.
Gross Profit was 569.037 + 544.822 + 503.607 + 486.037 = $2,104 Mil.
Total Current Assets was $4,150 Mil.
Total Assets was $7,135 Mil.
Property, Plant and Equipment(Net PPE) was $631 Mil.
Depreciation, Depletion and Amortization(DDA) was $228 Mil.
Selling, General & Admin. Expense(SGA) was $479 Mil.
Total Current Liabilities was $1,058 Mil.
Long-Term Debt was $498 Mil.
Net Income was 216.478 + 205.338 + 178.757 + 108.695 = $709 Mil.
Non Operating Income was -1.265 + 1.052 + -2.552 + -0.116 = $-3 Mil.
Cash Flow from Operations was 197.139 + 344.031 + 168.653 + 262.263 = $972 Mil.
Accounts Receivable was $395 Mil.
Revenue was 727.752 + 694.536 + 628.238 + 678.133 = $2,729 Mil.
Gross Profit was 476.29 + 458.743 + 409.118 + 444.87 = $1,789 Mil.
Total Current Assets was $5,924 Mil.
Total Assets was $8,973 Mil.
Property, Plant and Equipment(Net PPE) was $610 Mil.
Depreciation, Depletion and Amortization(DDA) was $112 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $2,623 Mil.
Long-Term Debt was $873 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)
=(451.511 / 3270.617) / (394.762 / 2728.659)
=0.13805071 / 0.14467253
=0.9542

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)
=(544.822 / 2728.659) / (569.037 / 3270.617)
=0.6556411 / 0.64315174
=1.0194

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 - (4149.892 + 631.269) / 7134.701) / (1 - (5923.884 + 609.937) / 8973.465)
=0.32987227 / 0.27187313
=1.2133

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
=3270.617 / 2728.659
=1.1986

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))
=(112.437 / (112.437 + 609.937)) / (228.353 / (228.353 + 631.269))
=0.15564929 / 0.2656435
=0.5859

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)
=(478.996 / 3270.617) / (431.449 / 2728.659)
=0.14645432 / 0.1581176
=0.9262

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)
=((498.448 + 1057.77) / 7134.701) / ((872.652 + 2622.526) / 8973.465)
=0.21811958 / 0.38950149
=0.56

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
=(709.268 - -2.881 - 972.086) / 7134.701
=-0.0364

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 -2.31 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 own currency.

Analog Devices Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 1.19770.90510.96670.92921.2240.93840.83021.0810.98111.1214
GMI 0.98290.96911.01211.00211.09990.8520.98181.02971.0031.0059
AQI 0.4621.92751.39110.95670.91460.67850.89690.96370.83465.6248
SGI 0.81051.0541.09541.0480.78011.37051.08390.90240.9751.0877
DEPI 0.90350.86971.08741.02280.93821.1141.02881.10091.00760.9611
SGAI 1.20851.09390.92591.01841.02750.85530.96071.08041.02491.0549
LVGI 1.46630.68921.4980.9981.22261.07161.09740.89550.95381.02
TATA -0.0494-0.0201-0.10050.0388-0.0545-0.065-0.0062-0.0293-0.0494-0.0352
M-score -3.12-2.18-2.87-2.34-2.79-2.70-2.66-2.60-2.80-0.60

Analog Devices Inc Quarterly Data

Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15
DSRI 1.06341.0260.98111.0111.07431.11011.12141.07380.9660.9542
GMI 1.01571.01241.0030.99290.98050.9731.00591.01331.01871.0194
AQI 0.87430.88220.83460.86740.93974.15455.62485.64945.39661.2133
SGI 0.95070.97360.9750.98681.00591.02951.08771.13971.17191.1986
DEPI 1.04591.01021.00761.05781.09291.17650.96110.78830.6940.5859
SGAI 1.04471.0211.02491.01810.99041.05931.05491.05391.05940.9262
LVGI 0.83470.89730.95380.98041.00921.7531.021.0151.01530.56
TATA -0.0237-0.0335-0.0494-0.0458-0.039-0.0284-0.0352-0.0329-0.0444-0.0364
M-score -2.57-2.65-2.80-2.74-2.61-1.46-0.60-0.59-0.83-2.31
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