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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-1.46 (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 -1.46 signals that the company is a manipulator.

ADI' s 10-Year Beneish M-Score Range
Min: -3.56   Max: -0.69
Current: -1.46

-3.56
-0.69

During the past 13 years, the highest Beneish M-Score of Analog Devices Inc was -0.69. The lowest was -3.56. And the median was -2.64.


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 * 1.1101+0.528 * 0.973+0.404 * 4.1545+0.892 * 1.0295+0.115 * 1.1765
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0593+4.679 * -0.0284-0.327 * 1.753
=-1.46

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
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.
Net Income was 180.606 + 187.433 + 152.586 + 201.554 = $722 Mil.
Non Operating Income was -0.422 + 0.441 + -0.431 + 85.958 = $86 Mil.
Cash Flow from Operations was 213.442 + 238.424 + 157.473 + 282.165 = $892 Mil.
Accounts Receivable was $345 Mil.
Revenue was 674.172 + 659.25 + 622.134 + 694.964 = $2,651 Mil.
Gross Profit was 435.062 + 422.195 + 390.284 + 443.282 = $1,691 Mil.
Total Current Assets was $5,244 Mil.
Total Assets was $6,139 Mil.
Property, Plant and Equipment(Net PPE) was $492 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $396 Mil.
Total Current Liabilities was $492 Mil.
Long-Term Debt was $872 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)
=(394.762 / 2728.659) / (345.437 / 2650.52)
=0.14467253 / 0.13032801
=1.1101

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)
=(458.743 / 2650.52) / (476.29 / 2728.659)
=0.63792124 / 0.6556411
=0.973

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 - (5923.884 + 609.937) / 8973.465) / (1 - (5244.49 + 492.421) / 6138.626)
=0.27187313 / 0.06544054
=4.1545

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
=2728.659 / 2650.52
=1.0295

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))
=(110.384 / (110.384 + 492.421)) / (112.437 / (112.437 + 609.937))
=0.18311726 / 0.15564929
=1.1765

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)
=(431.449 / 2728.659) / (395.645 / 2650.52)
=0.1581176 / 0.14927071
=1.0593

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)
=((872.652 + 2622.526) / 8973.465) / ((872.104 + 491.809) / 6138.626)
=0.38950149 / 0.22218539
=1.753

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
=(722.179 - 85.546 - 891.504) / 8973.465
=-0.0284

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 -1.46 signals that the company is likely to 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.86891.07250.9541.03210.92391.2240.93840.83021.0810.9811
GMI 0.93071.01910.9890.9810.97711.09990.8520.98181.02971.003
AQI 0.84720.49331.89231.41650.9570.91460.67850.89690.96370.8346
SGI 1.28650.9071.07720.98951.01450.78011.37051.08390.90240.975
DEPI 1.07760.90350.87881.07741.02160.93821.1141.02881.10091.0076
SGAI 0.91771.09691.08151.00841.04211.02750.85530.96071.08041.0249
LVGI 1.06081.48740.68921.49750.99831.22261.07161.09740.89550.9538
TATA -0.0434-0.0494-0.0201-0.10050.0388-0.0545-0.065-0.0062-0.0293-0.0494
M-score -2.64-3.11-2.12-2.93-2.39-2.79-2.70-2.66-2.60-2.80

Analog Devices Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.85721.03211.0811.18831.06341.0260.98111.0111.07431.1101
GMI 1.02791.03771.02971.02071.01571.01241.0030.99290.98050.973
AQI 0.99460.90450.96370.93330.87430.88220.83460.86740.93974.1545
SGI 0.92940.89340.90240.91840.95070.97360.9750.98681.00591.0295
DEPI 1.04571.0721.10091.0811.04591.01021.00761.05781.09291.1765
SGAI 1.05161.08671.08041.06011.04471.0211.02491.01810.99041.0593
LVGI 0.90580.9080.89550.86490.83470.89730.95380.98041.00921.753
TATA -0.0412-0.0282-0.0293-0.0203-0.0237-0.0335-0.0494-0.0458-0.039-0.0284
M-score -2.83-2.67-2.60-2.45-2.57-2.65-2.80-2.74-2.61-1.46
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