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Brocade Communications Systems Inc (NAS:BRCD)
Beneish M-Score
-2.71 (As of Today)

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.

Brocade Communications Systems Inc has a M-score of -2.71 suggests that the company is not a manipulator.

BRCD' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 0.16
Current: -2.71

-10000000
0.16

During the past 13 years, the highest Beneish M-Score of Brocade Communications Systems Inc was 0.16. The lowest was -10000000.00. And the median was -2.86.


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 Brocade Communications Systems 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 * 1.0865+0.528 * 0.9598+0.404 * 0.8271+0.892 * 1.0111+0.115 * 1.7635
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.028+4.679 * -0.0481-0.327 * 1.2513
=-2.71

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $240 Mil.
Revenue was 576.239 + 564.358 + 545.464 + 536.91 = $2,223 Mil.
Gross Profit was 389.683 + 377.118 + 361.713 + 354.292 = $1,483 Mil.
Total Current Assets was $2,095 Mil.
Total Assets was $4,183 Mil.
Property, Plant and Equipment(Net PPE) was $443 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $652 Mil.
Total Current Liabilities was $806 Mil.
Long-Term Debt was $784 Mil.
Net Income was 87.267 + 83.419 + 87.352 + -13.684 = $244 Mil.
Non Operating Income was -0.559 + 3.601 + 0 + 0 = $3 Mil.
Cash Flow from Operations was 10.393 + 157.853 + 106.031 + 168.244 = $443 Mil.
Accounts Receivable was $218 Mil.
Revenue was 564.535 + 558.8 + 536.551 + 538.784 = $2,199 Mil.
Gross Profit was 372.67 + 362.64 + 338.202 + 334.112 = $1,408 Mil.
Total Current Assets was $1,416 Mil.
Total Assets was $3,578 Mil.
Property, Plant and Equipment(Net PPE) was $459 Mil.
Depreciation, Depletion and Amortization(DDA) was $173 Mil.
Selling, General & Admin. Expense(SGA) was $627 Mil.
Total Current Liabilities was $491 Mil.
Long-Term Debt was $596 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)
=(239.767 / 2222.971) / (218.26 / 2198.67)
=0.10785881 / 0.0992691
=1.0865

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)
=(377.118 / 2198.67) / (389.683 / 2222.971)
=0.64021613 / 0.66703794
=0.9598

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 - (2094.514 + 442.644) / 4183.481) / (1 - (1416.132 + 459.367) / 3577.837)
=0.39352946 / 0.47580088
=0.8271

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
=2222.971 / 2198.67
=1.0111

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))
=(173.474 / (173.474 + 459.367)) / (81.468 / (81.468 + 442.644))
=0.27411941 / 0.15544006
=1.7635

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)
=(651.557 / 2222.971) / (626.875 / 2198.67)
=0.29310189 / 0.28511555
=1.028

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)
=((783.597 + 806.03) / 4183.481) / ((595.694 + 490.741) / 3577.837)
=0.37997711 / 0.30365693
=1.2513

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
=(244.354 - 3.042 - 442.521) / 4183.481
=-0.0481

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.

Brocade Communications Systems Inc has a M-score of -2.71 suggests that the company will not 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.

Brocade Communications Systems Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.76021.07361.0840.76251.40750.99520.76450.8981.07780.9058
GMI 0.97580.9481.10970.91171.10830.89890.9850.96710.97510.9562
AQI 0.40671.09163.66491.46931.03040.96270.98250.88180.8950.9163
SGI 0.96291.30741.64781.1861.33131.07081.02691.04210.99330.9948
DEPI 1.03181.18680.77541.19770.9011.13840.96741.03350.96461.5203
SGAI 1.03331.0321.08331.05580.97361.13821.11710.9490.94641.001
LVGI 0.83980.63751.01821.9240.81680.85870.93780.89250.94580.9916
TATA -0.0676-0.09-0.0561-0.0782-0.0515-0.0456-0.1148-0.1101-0.0879-0.0823
M-score -3.25-2.42-1.00-3.04-1.93-2.66-3.23-3.07-2.86-2.95

Brocade Communications Systems Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.8980.94281.04810.93141.07781.03790.83360.89260.90581.0865
GMI 0.96710.97010.97870.97360.97510.97350.95890.95350.95620.9598
AQI 0.88180.83940.91150.90620.8950.95930.85340.87090.91630.8271
SGI 1.04211.04791.04811.01470.99330.97030.97150.98360.99481.0111
DEPI 1.03351.02091.00490.98360.96460.99551.09451.26441.52031.7635
SGAI 0.9490.93940.91930.9460.94640.94990.9590.96011.0011.028
LVGI 0.89251.07350.95140.92780.94580.80350.94860.97840.99161.2513
TATA -0.1101-0.1078-0.1077-0.0829-0.0879-0.074-0.1036-0.1136-0.0819-0.0481
M-score -3.07-3.09-2.91-2.94-2.86-2.78-3.19-3.16-2.95-2.71
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