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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.
During the past 13 years, the highest Beneish M-Score of Altera Corp was 1.51. The lowest was -3.45. And the median was -2.54.
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 * 0.95||+||0.528 * 1.0206||+||0.404 * 1.3526||+||0.892 * 0.9872||+||0.115 * 1.0206|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9721||+||4.679 * -0.0349||-||0.327 * 1.005|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $424 Mil.|
Revenue was 414.162 + 435.485 + 479.873 + 499.606 = $1,829 Mil.
Gross Profit was 287.572 + 279.222 + 311.701 + 333.587 = $1,212 Mil.
Total Current Assets was $2,869 Mil.
Total Assets was $5,784 Mil.
Property, Plant and Equipment(Net PPE) was $211 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $304 Mil.
Total Current Liabilities was $628 Mil.
Long-Term Debt was $1,493 Mil.
Net Income was 70.339 + 94.852 + 111.131 + 118.009 = $394 Mil.
Non Operating Income was 1.463 + 2.506 + 2.327 + -0.72 = $6 Mil.
Cash Flow from Operations was 89.22 + 136.633 + 150.778 + 214.049 = $591 Mil.
|Accounts Receivable was $453 Mil.
Revenue was 491.517 + 461.092 + 454.367 + 445.945 = $1,853 Mil.
Gross Profit was 329.126 + 309.224 + 310.343 + 304.42 = $1,253 Mil.
Total Current Assets was $3,610 Mil.
Total Assets was $5,816 Mil.
Property, Plant and Equipment(Net PPE) was $196 Mil.
Depreciation, Depletion and Amortization(DDA) was $62 Mil.
Selling, General & Admin. Expense(SGA) was $317 Mil.
Total Current Liabilities was $630 Mil.
Long-Term Debt was $1,492 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)|
|=||(424.427 / 1829.126)||/||(452.559 / 1852.921)|
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)|
|=||(279.222 / 1852.921)||/||(287.572 / 1829.126)|
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 - (2868.562 + 210.98) / 5784.456)||/||(1 - (3609.708 + 195.582) / 5815.864)|
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))|
|=||(62.132 / (62.132 + 195.582))||/||(65.252 / (65.252 + 210.98))|
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)|
|=||(304.285 / 1829.126)||/||(317.08 / 1852.921)|
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)|
|=||((1493.406 + 628.206) / 5784.456)||/||((1492.113 + 630.303) / 5815.864)|
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|
|=||(394.331 - 5.576||-||590.68)||/||5784.456|
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 -2.54 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