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Analog Devices Inc (NAS:ADI)
Beneish M-Score
-0.60 (As of Today)

Warning Sign:

Beneish M-Score -0.60 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 -0.60 signals that the company is a manipulator.

ADI' s 10-Year Beneish M-Score Range
Min: -3.41   Max: -0.6
Current: -0.6

-3.41
-0.6

During the past 13 years, the highest Beneish M-Score of Analog Devices Inc was -0.60. The lowest was -3.41. 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 * 1.1214+0.528 * 1.0059+0.404 * 5.6248+0.892 * 1.0877+0.115 * 0.9611
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0549+4.679 * -0.0352-0.327 * 1.02
=-0.60

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $397 Mil.
Revenue was 814.247 + 727.752 + 694.536 + 628.238 = $2,865 Mil.
Gross Profit was 486.037 + 476.29 + 458.743 + 409.118 = $1,830 Mil.
Total Current Assets was $3,812 Mil.
Total Assets was $6,860 Mil.
Property, Plant and Equipment(Net PPE) was $622 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $455 Mil.
Total Current Liabilities was $709 Mil.
Long-Term Debt was $873 Mil.
Net Income was 108.695 + 180.606 + 187.433 + 152.586 = $629 Mil.
Non Operating Income was -0.116 + -0.422 + 0.441 + -0.431 = $-1 Mil.
Cash Flow from Operations was 262.263 + 213.442 + 238.424 + 157.473 = $872 Mil.
Accounts Receivable was $325 Mil.
Revenue was 678.133 + 674.172 + 659.25 + 622.134 = $2,634 Mil.
Gross Profit was 444.87 + 435.062 + 422.195 + 390.284 = $1,692 Mil.
Total Current Assets was $5,472 Mil.
Total Assets was $6,382 Mil.
Property, Plant and Equipment(Net PPE) was $508 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 $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)
=(396.605 / 2864.773) / (325.144 / 2633.689)
=0.13844203 / 0.12345573
=1.1214

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)
=(476.29 / 2633.689) / (486.037 / 2864.773)
=0.64260093 / 0.63885969
=1.0059

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 - (3811.886 + 622.422) / 6859.69) / (1 - (5472.425 + 508.171) / 6381.75)
=0.35357021 / 0.06285956
=5.6248

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
=2864.773 / 2633.689
=1.0877

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))
=(110.416 / (110.416 + 508.171)) / (141.97 / (141.97 + 622.422))
=0.17849712 / 0.18572931
=0.9611

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)
=(454.676 / 2864.773) / (396.233 / 2633.689)
=0.15871275 / 0.15044791
=1.0549

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)
=((872.789 + 709.056) / 6859.69) / ((872.241 + 570.512) / 6381.75)
=0.23060007 / 0.22607482
=1.02

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
=(629.32 - -0.528 - 871.602) / 6859.69
=-0.0352

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 -0.60 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

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 1.03211.0811.18831.06341.0260.98111.0111.07431.11011.1214
GMI 1.03771.02971.02071.01571.01241.0030.99290.98050.9731.0059
AQI 0.90450.96370.93330.87430.88220.83460.86740.93974.15455.6248
SGI 0.89340.90240.91840.95070.97360.9750.98681.00591.02951.0877
DEPI 1.0721.10091.0811.04591.01021.00761.05781.09291.17650.9611
SGAI 1.08671.08041.06011.04471.0211.02491.01810.99041.05931.0549
LVGI 0.9080.89550.86490.83470.89730.95380.98041.00921.7531.02
TATA -0.0282-0.0293-0.0203-0.0237-0.0335-0.0494-0.0458-0.039-0.0284-0.0352
M-score -2.67-2.60-2.45-2.57-2.65-2.80-2.74-2.61-1.46-0.60
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