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Brocade Communications Systems Inc (NAS:BRCD)
Beneish M-Score
-2.34 (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 -2.34 suggests that the company is not a manipulator.

BRCD' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 0.13
Current: -2.34

-10000000
0.13

During the past 13 years, the highest Beneish M-Score of Brocade Communications Systems Inc was 0.13. 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 * 1.3682+0.528 * 1.0311+0.404 * 1.2888+0.892 * 1.017+0.115 * 0.8638
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0803+4.679 * -0.0414-0.327 * 1.384
=-2.34

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $278 Mil.
Revenue was 590.721 + 523.306 + 574.284 + 588.827 = $2,277 Mil.
Gross Profit was 356.899 + 350.311 + 388.815 + 394.277 = $1,490 Mil.
Total Current Assets was $1,599 Mil.
Total Assets was $4,874 Mil.
Property, Plant and Equipment(Net PPE) was $460 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $726 Mil.
Total Current Liabilities was $701 Mil.
Long-Term Debt was $1,517 Mil.
Net Income was 10.495 + 43.085 + 93.646 + 84.388 = $232 Mil.
Non Operating Income was 0 + 0 + 0 + 0.095 = $0 Mil.
Cash Flow from Operations was 28.274 + 112.432 + 112.2 + 180.267 = $433 Mil.
Accounts Receivable was $200 Mil.
Revenue was 551.819 + 546.575 + 576.239 + 564.358 = $2,239 Mil.
Gross Profit was 371.904 + 372.209 + 389.683 + 377.118 = $1,511 Mil.
Total Current Assets was $1,714 Mil.
Total Assets was $3,904 Mil.
Property, Plant and Equipment(Net PPE) was $440 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $661 Mil.
Total Current Liabilities was $492 Mil.
Long-Term Debt was $792 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)
=(278.18 / 2277.138) / (199.919 / 2238.991)
=0.12216212 / 0.08928977
=1.3682

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)
=(1510.914 / 2238.991) / (1490.302 / 2277.138)
=0.67481915 / 0.65446275
=1.0311

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 - (1599.358 + 459.812) / 4873.765) / (1 - (1714.287 + 440.343) / 3904.065)
=0.57749912 / 0.44810601
=1.2888

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
=2277.138 / 2238.991
=1.017

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))
=(82.846 / (82.846 + 440.343)) / (103.217 / (103.217 + 459.812))
=0.15834813 / 0.18332448
=0.8638

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)
=(725.762 / 2277.138) / (660.551 / 2238.991)
=0.31871674 / 0.29502173
=1.0803

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)
=((1516.761 + 701.21) / 4873.765) / ((791.63 + 492.123) / 3904.065)
=0.4550837 / 0.3288247
=1.384

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
=(231.614 - 0.095 - 433.173) / 4873.765
=-0.0414

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 -2.34 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 -0.113-0.0561-0.0782-0.0515-0.0456-0.1145-0.1101-0.0879-0.0823-0.0266
M-score -2.52-1.00-3.04-1.93-2.66-3.22-3.07-2.86-2.95-2.58

Brocade Communications Systems Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 0.83360.89260.90581.08650.93991.02681.02460.71641.10411.3682
GMI 0.95890.95350.95620.95980.96690.9750.98190.98780.99951.0311
AQI 0.85340.87090.91630.82710.98921.00150.99071.17381.02191.2888
SGI 0.97150.98360.99481.01111.01631.01511.02361.01731.00251.017
DEPI 1.09451.26441.52031.76351.60611.38131.13890.93610.91520.8638
SGAI 0.9590.96011.0011.0281.03521.0431.0281.02921.05161.0803
LVGI 0.94860.97840.99161.25131.09121.07691.06170.86380.98771.384
TATA -0.1036-0.1136-0.0819-0.0482-0.0367-0.0229-0.0266-0.0518-0.0369-0.0414
M-score -3.19-3.16-2.95-2.71-2.68-2.55-2.58-2.87-2.56-2.34
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