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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 -1.99 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Altera Corp. was -0.37. The lowest was -3.26. And the median was -2.43.
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 * 1.5356||+||0.528 * 1.0173||+||0.404 * 1.9622||+||0.892 * 0.9717||+||0.115 * 0.7466|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1364||+||4.679 * -0.025||-||0.327 * 1.6338|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|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.
Net Income was 98.934 + 119.432 + 101.509 + 120.189 = $440 Mil.
Non Operating Income was 0.024 + 0.033 + 0.042 + 0.054 = $0 Mil.
Cash Flow from Operations was 130.759 + 245.406 + 64.565 + 149.478 = $590 Mil.
|Accounts Receivable was $324 Mil.
Revenue was 439.44 + 495.01 + 464.831 + 383.754 = $1,783 Mil.
Gross Profit was 306.073 + 343.003 + 323.516 + 268.92 = $1,242 Mil.
Total Current Assets was $3,680 Mil.
Total Assets was $4,658 Mil.
Property, Plant and Equipment(Net PPE) was $206 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $290 Mil.
Total Current Liabilities was $543 Mil.
Long-Term Debt was $500 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)|
|=||(483.032 / 1732.572)||/||(323.708 / 1783.035)|
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)|
|=||(304.42 / 1783.035)||/||(310.343 / 1732.572)|
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 - (3852.84 + 204.142) / 6009.847)||/||(1 - (3680.352 + 206.148) / 4657.828)|
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))|
|=||(36.862 / (36.862 + 206.148))||/||(52.049 / (52.049 + 204.142))|
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)|
|=||(320.068 / 1732.572)||/||(289.854 / 1783.035)|
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)|
|=||((1491.466 + 707.386) / 6009.847)||/||((500 + 543.077) / 4657.828)|
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|
|=||(440.064 - 0.153||-||590.208)||/||6009.847|
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 -1.99 signals that the company is likely to 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