Switch to:
Brocade Communications Systems Inc (NAS:BRCD)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

BRCD' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 0.16
Current: -2.87

-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 -2.80.


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 * 0.7164+0.528 * 0.9878+0.404 * 1.1738+0.892 * 1.0173+0.115 * 0.9361
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0292+4.679 * -0.0518-0.327 * 0.8638
=-2.87

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $175 Mil.
Revenue was 574.284 + 588.827 + 551.819 + 546.575 = $2,262 Mil.
Gross Profit was 388.815 + 394.277 + 371.904 + 372.209 = $1,527 Mil.
Total Current Assets was $1,661 Mil.
Total Assets was $3,909 Mil.
Property, Plant and Equipment(Net PPE) was $442 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $682 Mil.
Total Current Liabilities was $485 Mil.
Long-Term Debt was $798 Mil.
Net Income was 93.646 + 84.388 + 91.667 + 77.04 = $347 Mil.
Non Operating Income was 0 + 0.095 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 112.2 + 180.267 + 54.965 + 201.874 = $549 Mil.
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.



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)
=(174.757 / 2261.505) / (239.767 / 2222.971)
=0.07727465 / 0.10785881
=0.7164

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)
=(394.277 / 2222.971) / (388.815 / 2261.505)
=0.66703794 / 0.67530472
=0.9878

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 - (1661.06 + 442.158) / 3908.895) / (1 - (2094.514 + 442.644) / 4183.481)
=0.46194052 / 0.39352946
=1.1738

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
=2261.505 / 2222.971
=1.0173

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))
=(81.468 / (81.468 + 442.644)) / (88.044 / (88.044 + 442.158))
=0.15544006 / 0.16605746
=0.9361

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)
=(682.2 / 2261.505) / (651.557 / 2222.971)
=0.30165752 / 0.29310189
=1.0292

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)
=((798.103 + 484.839) / 3908.895) / ((783.597 + 806.03) / 4183.481)
=0.32821091 / 0.37997711
=0.8638

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
=(346.741 - 0.095 - 549.306) / 3908.895
=-0.0518

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 -2.87 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

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 1.07361.0840.76251.40750.99520.76450.8981.07780.90581.0246
GMI 0.9481.10970.91171.10830.89890.9850.96710.97510.95620.9819
AQI 1.09163.66491.46931.03040.96270.98250.88180.8950.91630.9907
SGI 1.30741.64781.1861.33131.07081.02691.04210.99330.99481.0236
DEPI 1.18680.77541.19770.9011.13840.96741.03350.96461.52031.1389
SGAI 1.0321.08331.05580.97361.13821.09650.96680.94641.0011.028
LVGI 0.63751.01821.9240.81680.85870.93780.89250.94580.99161.0617
TATA -0.09-0.0561-0.0782-0.0515-0.0456-0.1145-0.1101-0.0879-0.0823-0.0266
M-score -2.42-1.00-3.04-1.93-2.66-3.22-3.07-2.86-2.95-2.58

Brocade Communications Systems Inc Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 1.07781.03790.83360.89260.90581.08650.93991.02681.02460.7164
GMI 0.97510.97350.95890.95350.95620.95980.96690.9750.98190.9878
AQI 0.8950.95930.85340.87090.91630.82710.98921.00150.99071.1738
SGI 0.99330.97030.97150.98360.99481.01111.01631.01511.02361.0173
DEPI 0.96460.99551.09451.26441.52031.76351.60611.38131.13890.9361
SGAI 0.94640.94990.9590.96011.0011.0281.03521.0431.0281.0292
LVGI 0.94580.80350.94860.97840.99161.25131.09121.07691.06170.8638
TATA -0.0879-0.074-0.1036-0.1136-0.0819-0.0482-0.0367-0.0229-0.0266-0.0518
M-score -2.86-2.78-3.19-3.16-2.95-2.71-2.68-2.55-2.58-2.87
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK