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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-0.83 (As of Today)

Warning Sign:

Beneish M-Score -0.83 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.

Analog Devices Inc has a M-score of -0.83 signals that the company is a manipulator.

ADI' s 10-Year Beneish M-Score Range
Min: -3.49   Max: -0.59
Current: -0.83

-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 * 0.966+0.528 * 1.0187+0.404 * 5.3966+0.892 * 1.1719+0.115 * 0.694
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0594+4.679 * -0.0444-0.327 * 1.0153
=-0.83

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $409 Mil.
Revenue was 821.019 + 771.986 + 814.247 + 727.752 = $3,135 Mil.
Gross Profit was 544.822 + 503.607 + 486.037 + 476.29 = $2,011 Mil.
Total Current Assets was $4,046 Mil.
Total Assets was $7,048 Mil.
Property, Plant and Equipment(Net PPE) was $630 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $492 Mil.
Total Current Liabilities was $1,068 Mil.
Long-Term Debt was $498 Mil.
Net Income was 205.338 + 178.757 + 108.695 + 180.606 = $673 Mil.
Non Operating Income was 1.052 + -2.552 + -0.116 + -0.422 = $-2 Mil.
Cash Flow from Operations was 344.031 + 168.653 + 262.263 + 213.442 = $988 Mil.
Accounts Receivable was $361 Mil.
Revenue was 694.536 + 628.238 + 678.133 + 674.172 = $2,675 Mil.
Gross Profit was 458.743 + 409.118 + 444.87 + 435.062 = $1,748 Mil.
Total Current Assets was $5,638 Mil.
Total Assets was $6,595 Mil.
Property, Plant and Equipment(Net PPE) was $545 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $396 Mil.
Total Current Liabilities was $571 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)
=(408.51 / 3135.004) / (360.847 / 2675.079)
=0.13030605 / 0.13489209
=0.966

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)
=(503.607 / 2675.079) / (544.822 / 3135.004)
=0.65336127 / 0.64138866
=1.0187

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 - (4045.761 + 629.665) / 7048.475) / (1 - (5638.032 + 545.485) / 6594.951)
=0.33667552 / 0.06238621
=5.3966

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
=3135.004 / 2675.079
=1.1719

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))
=(109.977 / (109.977 + 545.485)) / (200.768 / (200.768 + 629.665))
=0.16778547 / 0.24176303
=0.694

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)
=(491.955 / 3135.004) / (396.233 / 2675.079)
=0.15692324 / 0.14812011
=1.0594

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)
=((498.399 + 1068.219) / 7048.475) / ((872.515 + 571.202) / 6594.951)
=0.2222634 / 0.21891247
=1.0153

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
=(673.396 - -2.038 - 988.389) / 7048.475
=-0.0444

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 -0.83 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

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 0.4621.92751.39110.95670.85030.72980.89690.96370.83465.6248
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 1.46630.68921.4980.9981.23521.06061.09740.89550.95381.02
TATA -0.0494-0.0201-0.10050.0388-0.055-0.065-0.0062-0.0293-0.0494-0.0352
M-score -3.12-2.18-2.87-2.34-2.82-2.68-2.66-2.60-2.80-0.60

Analog Devices Inc Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 1.18831.06341.0260.98111.0111.07431.11011.12141.07380.966
GMI 1.02071.01571.01241.0030.99290.98050.9731.00591.01331.0187
AQI 0.93330.87430.88220.83460.86740.93974.15455.62485.64945.3966
SGI 0.91840.95070.97360.9750.98681.00591.02951.08771.13971.1719
DEPI 1.0811.04591.01021.00761.05781.09291.17650.96110.78830.694
SGAI 1.06011.04471.0211.02491.01810.99041.05931.05491.05391.0594
LVGI 0.86490.83470.89730.95380.98041.00921.7531.021.0151.0153
TATA -0.0203-0.0237-0.0335-0.0494-0.0458-0.039-0.0284-0.0352-0.0329-0.0444
M-score -2.45-2.57-2.65-2.80-2.74-2.61-1.46-0.60-0.59-0.83
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