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Brocade Communications Systems Inc (NAS:BRCD)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

BRCD' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 0.16
Current: -2.78

-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 * 1.0379+0.528 * 0.9735+0.404 * 0.9593+0.892 * 0.9703+0.115 * 0.9955
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9499+4.679 * -0.0744-0.327 * 0.8035
=-2.78

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
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.
Net Income was 80.884 + 64.233 + 118.696 + 46.949 = $311 Mil.
Non Operating Income was 0 + 75.835 + 0 + 0 = $76 Mil.
Cash Flow from Operations was 109.469 + 169.769 + 102.155 + 119.615 = $501 Mil.
Accounts Receivable was $217 Mil.
Revenue was 588.729 + 578.357 + 555.332 + 543.439 = $2,266 Mil.
Gross Profit was 373.925 + 360.69 + 340.478 + 337.082 = $1,412 Mil.
Total Current Assets was $1,391 Mil.
Total Assets was $3,772 Mil.
Property, Plant and Equipment(Net PPE) was $510 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $680 Mil.
Total Current Liabilities was $828 Mil.
Long-Term Debt was $597 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)
=(218.26 / 2198.67) / (216.706 / 2265.857)
=0.0992691 / 0.09563975
=1.0379

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)
=(362.64 / 2265.857) / (372.67 / 2198.67)
=0.62324101 / 0.64021613
=0.9735

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 - (1416.132 + 459.367) / 3577.837) / (1 - (1390.959 + 510.282) / 3772.182)
=0.47580088 / 0.49598376
=0.9593

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
=2198.67 / 2265.857
=0.9703

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))
=(191.507 / (191.507 + 510.282)) / (173.474 / (173.474 + 459.367))
=0.27288401 / 0.27411941
=0.9955

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)
=(626.875 / 2198.67) / (680.135 / 2265.857)
=0.28511555 / 0.30016678
=0.9499

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)
=((595.694 + 490.741) / 3577.837) / ((597.44 + 828.166) / 3772.182)
=0.30365693 / 0.37792609
=0.8035

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
=(310.762 - 75.835 - 501.008) / 3577.837
=-0.0744

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 -2.78 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.1260.76021.07361.0840.76251.40750.99520.76450.8981.0778
GMI 0.98540.97580.9481.10970.91171.10830.89890.9850.96710.9751
AQI 0.64460.40671.09163.66491.46931.03040.96270.98250.88180.895
SGI 1.13510.96291.30741.64781.1861.33131.07081.02691.04210.9933
DEPI 0.92191.03181.18680.77541.19770.9011.13840.96741.03350.9646
SGAI 0.82061.03331.0321.08331.05580.97361.13821.11710.9490.9464
LVGI 0.9480.83980.63751.01821.9240.81680.85870.93780.89250.9458
TATA 0.0017-0.0676-0.09-0.0561-0.0782-0.0515-0.0456-0.1148-0.1101-0.0879
M-score -2.35-3.25-2.42-1.00-3.04-1.93-2.66-3.23-3.07-2.86

Brocade Communications Systems Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.76530.76760.7160.75810.8980.94281.04811.22981.07781.0379
GMI 0.98570.9650.96080.97610.96710.97010.97870.97360.97510.9735
AQI 0.98250.97730.98110.96850.88180.83940.91150.90620.8950.9593
SGI 1.02581.02991.00481.031.04211.04791.04811.01470.99330.9703
DEPI 0.96740.97361.00721.02661.03351.02091.00490.98360.96460.9955
SGAI 1.11831.05751.04250.98350.9490.93940.91930.9460.94640.9499
LVGI 0.93780.91090.91250.93720.89251.07350.95140.92780.94580.8035
TATA -0.1148-0.1081-0.1108-0.1286-0.1101-0.1078-0.1077-0.0829-0.0879-0.0744
M-score -3.23-3.18-3.26-3.28-3.07-3.09-2.91-2.66-2.86-2.78
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