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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

ADI' s 10-Year Beneish M-Score Range
Min: -3.49   Max: -1.86
Current: -2.74

-3.49
-1.86

During the past 13 years, the highest Beneish M-Score of Analog Devices Inc was -1.86. The lowest was -3.49. 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 * 1.011+0.528 * 0.9929+0.404 * 0.8674+0.892 * 0.9868+0.115 * 1.0578
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0181+4.679 * -0.0458-0.327 * 0.9804
=-2.74

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
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.
Net Income was 152.586 + 201.554 + 176.239 + 164.472 = $695 Mil.
Non Operating Income was -0.431 + 85.958 + -8.754 + -0.408 = $76 Mil.
Cash Flow from Operations was 157.473 + 282.165 + 220.025 + 252.186 = $912 Mil.
Accounts Receivable was $330 Mil.
Revenue was 622.134 + 694.964 + 683.026 + 675.094 = $2,675 Mil.
Gross Profit was 390.284 + 443.282 + 447.874 + 440.455 = $1,722 Mil.
Total Current Assets was $4,814 Mil.
Total Assets was $5,717 Mil.
Property, Plant and Equipment(Net PPE) was $491 Mil.
Depreciation, Depletion and Amortization(DDA) was $109 Mil.
Selling, General & Admin. Expense(SGA) was $395 Mil.
Total Current Liabilities was $509 Mil.
Long-Term Debt was $760 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)
=(328.787 / 2639.793) / (329.578 / 2675.218)
=0.1245503 / 0.12319669
=1.011

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)
=(444.87 / 2675.218) / (409.118 / 2639.793)
=0.64364661 / 0.64824969
=0.9929

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 - (5470.959 + 529.01) / 6399.468) / (1 - (4813.935 + 491.431) / 5716.808)
=0.06242691 / 0.07197058
=0.8674

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
=2639.793 / 2675.218
=0.9868

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))
=(109.4 / (109.4 + 491.431)) / (109.996 / (109.996 + 529.01))
=0.18208115 / 0.1721361
=1.0578

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)
=(396.851 / 2639.793) / (395.034 / 2675.218)
=0.15033414 / 0.14766423
=1.0181

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)
=((872.378 + 519.494) / 6399.468) / ((759.672 + 508.535) / 5716.808)
=0.21749808 / 0.22183831
=0.9804

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
=(694.851 - 76.365 - 911.849) / 6399.468
=-0.0458

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 -2.74 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.87071.19770.90510.96670.92921.2240.93840.83021.0810.9811
GMI 0.93070.98290.96911.01211.00211.09990.8520.98181.02971.003
AQI 0.90460.4621.92751.39110.95670.85030.72980.89690.96370.8346
SGI 1.28650.81051.0541.09541.0480.78011.37051.08390.90240.975
DEPI 1.07760.90350.86971.08741.02280.93821.1141.02881.10091.0076
SGAI 0.91771.20851.09390.92591.01841.02750.85530.96071.08041.0249
LVGI 1.07611.46630.68921.4980.9981.23521.06061.09740.89550.9538
TATA -0.0434-0.0494-0.0201-0.10050.0388-0.055-0.065-0.0062-0.0293-0.0494
M-score -2.62-3.12-2.18-2.87-2.34-2.82-2.68-2.66-2.60-2.80

Analog Devices Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.83020.77890.85721.03211.0811.18831.06341.0260.98111.011
GMI 0.98181.00861.02791.03771.02971.02071.01571.01241.0030.9929
AQI 0.89690.90580.99460.90450.96370.93330.87430.88220.83460.8674
SGI 1.08391.0090.92940.89340.90240.91840.95070.97360.9750.9868
DEPI 1.02881.03391.04571.0721.10091.0811.04591.01021.00761.0578
SGAI 0.96071.00011.05161.08671.08041.06011.04471.0211.02491.0181
LVGI 1.09741.0420.90580.9080.89550.86490.83470.89730.95380.9804
TATA -0.0062-0.0215-0.0412-0.0282-0.0293-0.0203-0.0237-0.0335-0.0494-0.0458
M-score -2.66-2.82-2.83-2.67-2.60-2.45-2.57-2.65-2.80-2.74
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