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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.
Benchmark Electronics has a M-score of -2.45 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Benchmark Electronics was 27.79. The lowest was -49.12. And the median was -2.32.
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 Benchmark Electronics 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 * 1.0085||+||0.528 * 0.9284||+||0.404 * 1.0393||+||0.892 * 1.077||+||0.115 * 0.9618|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0859||+||4.679 * 0.0048||-||0.327 * 1.0855|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $468 Mil.|
Revenue was 639.344 + 756.843 + 599.658 + 607.522 = $2,603 Mil.
Gross Profit was 51.123 + 59.843 + 45.44 + 44.367 = $201 Mil.
Total Current Assets was $1,343 Mil.
Total Assets was $1,658 Mil.
Property, Plant and Equipment(Net PPE) was $188 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $105 Mil.
Total Current Liabilities was $376 Mil.
Long-Term Debt was $9 Mil.
Net Income was 19.125 + 67.489 + 23.726 + 8.457 = $119 Mil.
Non Operating Income was 0.026 + -0.661 + 0.745 + -0.501 = $-0 Mil.
Cash Flow from Operations was 60.734 + -0.854 + 38.713 + 12.57 = $111 Mil.
|Accounts Receivable was $431 Mil.
Revenue was 542.444 + 633.933 + 610.769 + 630.031 = $2,417 Mil.
Gross Profit was 36.834 + 45.459 + 44.78 + 45.991 = $173 Mil.
Total Current Assets was $1,200 Mil.
Total Assets was $1,483 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $90 Mil.
Total Current Liabilities was $308 Mil.
Long-Term Debt was $10 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)|
|=||(467.802 / 2603.367)||/||(430.667 / 2417.177)|
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)|
|=||(59.843 / 2417.177)||/||(51.123 / 2603.367)|
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 - (1342.618 + 187.689) / 1657.891)||/||(1 - (1199.634 + 173.351) / 1482.777)|
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))|
|=||(32.928 / (32.928 + 173.351))||/||(37.351 / (37.351 + 187.689))|
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)|
|=||(105.085 / 2603.367)||/||(89.849 / 2417.177)|
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)|
|=||((9.366 + 376.181) / 1657.891)||/||((9.971 + 307.699) / 1482.777)|
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|
|=||(118.797 - -0.391||-||111.163)||/||1657.891|
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.
Benchmark Electronics has a M-score of -2.45 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
Benchmark Electronics Annual Data
Benchmark Electronics Quarterly Data