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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.
Altera Corp has a M-score of -2.72 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Altera Corp was -0.37. The lowest was -3.27. And the median was -2.46.
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 Altera Corp 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 * 0.7017||+||0.528 * 1.0302||+||0.404 * 1.1882||+||0.892 * 1.1152||+||0.115 * 0.8026|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8748||+||4.679 * -0.0341||-||0.327 * 0.9962|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $378 Mil.|
Revenue was 479.873 + 499.606 + 491.517 + 461.092 = $1,932 Mil.
Gross Profit was 311.701 + 333.587 + 329.126 + 309.224 = $1,284 Mil.
Total Current Assets was $3,289 Mil.
Total Assets was $5,674 Mil.
Property, Plant and Equipment(Net PPE) was $195 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $312 Mil.
Total Current Liabilities was $575 Mil.
Long-Term Debt was $1,493 Mil.
Net Income was 111.131 + 118.009 + 127.004 + 116.514 = $473 Mil.
Non Operating Income was -0.01 + 0.059 + 0.043 + 0.048 = $0 Mil.
Cash Flow from Operations was 150.778 + 214.049 + 170.958 + 130.43 = $666 Mil.
|Accounts Receivable was $483 Mil.
Revenue was 454.367 + 445.945 + 421.759 + 410.501 = $1,733 Mil.
Gross Profit was 310.343 + 304.42 + 286.655 + 284.418 = $1,186 Mil.
Total Current Assets was $3,853 Mil.
Total Assets was $6,010 Mil.
Property, Plant and Equipment(Net PPE) was $204 Mil.
Depreciation, Depletion and Amortization(DDA) was $52 Mil.
Selling, General & Admin. Expense(SGA) was $320 Mil.
Total Current Liabilities was $707 Mil.
Long-Term Debt was $1,491 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(377.964 / 1932.088)||/||(483.032 / 1732.572)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(333.587 / 1732.572)||/||(311.701 / 1932.088)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3288.543 + 194.84) / 5674.226)||/||(1 - (3852.84 + 204.142) / 6009.847)|
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.
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))|
|=||(52.049 / (52.049 + 204.142))||/||(66.04 / (66.04 + 194.84))|
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)|
|=||(312.249 / 1932.088)||/||(320.068 / 1732.572)|
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)|
|=||((1492.759 + 575.308) / 5674.226)||/||((1491.466 + 707.386) / 6009.847)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(472.658 - 0.14||-||666.215)||/||5674.226|
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.
Altera Corp has a M-score of -2.72 suggests that the company will not be a manipulator.
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
Altera Corp Annual Data
Altera Corp Quarterly Data