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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-0.59 (As of Today)

Warning Sign:

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.

Analog Devices Inc has a M-score of -0.59 signals that the company is a manipulator.

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

-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 * 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
=-0.59

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

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

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)
=(402.35 / 3008.521) / (328.787 / 2639.793)
=0.13373681 / 0.1245503
=1.0738

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)
=(486.037 / 2639.793) / (503.607 / 3008.521)
=0.64824969 / 0.63974192
=1.0133

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 - (3803.037 + 612.472) / 6821.156) / (1 - (5470.959 + 529.01) / 6399.468)
=0.35267439 / 0.06242691
=5.6494

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
=3008.521 / 2639.793
=1.1397

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))
=0.1721361 / 0.21835102
=0.7883

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)
=0.15843965 / 0.15033414
=1.0539

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)
=0.2207595 / 0.21749808
=1.015

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
=(655.491 - -2.649 - 882.782) / 6821.156
=-0.0329

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.


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

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 1.0811.18831.06341.0260.98111.0111.07431.11011.12141.0738
GMI 1.02971.02071.01571.01241.0030.99290.98050.9731.00591.0133
AQI 0.96370.93330.87430.88220.83460.86740.93974.15455.62485.6494
SGI 0.90240.91840.95070.97360.9750.98681.00591.02951.08771.1397
DEPI 1.10091.0811.04591.01021.00761.05781.09291.17650.96110.7883
SGAI 1.08041.06011.04471.0211.02491.01810.99041.05931.05491.0539
LVGI 0.89550.86490.83470.89730.95380.98041.00921.7531.021.015
TATA -0.0293-0.0203-0.0237-0.0335-0.0494-0.0458-0.039-0.0284-0.0352-0.0329
M-score -2.60-2.45-2.57-2.65-2.80-2.74-2.61-1.46-0.60-0.59
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