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Broadcom Corp (NAS:BRCM)
Beneish M-Score
-2.54 (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.

Broadcom Corp has a M-score of -2.54 suggests that the company is not a manipulator.

BRCM' s Beneish M-Score Range Over the Past 10 Years
Min: -5.97   Max: -0.18
Current: -2.54

-5.97
-0.18

During the past 13 years, the highest Beneish M-Score of Broadcom Corp was -0.18. The lowest was -5.97. And the median was -2.89.


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 Broadcom Corp 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 * 1.0135+0.528 * 0.9471+0.404 * 1.0303+0.892 * 1.0162+0.115 * 1.425
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9841+4.679 * -0.0366-0.327 * 0.8422
=-2.54

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $966 Mil.
Revenue was 2187 + 2096 + 2058 + 2143 = $8,484 Mil.
Gross Profit was 1172 + 1157 + 1086 + 1131 = $4,546 Mil.
Total Current Assets was $5,113 Mil.
Total Assets was $13,235 Mil.
Property, Plant and Equipment(Net PPE) was $656 Mil.
Depreciation, Depletion and Amortization(DDA) was $306 Mil.
Selling, General & Admin. Expense(SGA) was $715 Mil.
Total Current Liabilities was $1,421 Mil.
Long-Term Debt was $1,594 Mil.
Net Income was 429 + 386 + 209 + 390 = $1,414 Mil.
Non Operating Income was 6 + -5 + 0 + 5 = $6 Mil.
Cash Flow from Operations was 483 + 802 + -25 + 633 = $1,893 Mil.
Accounts Receivable was $938 Mil.
Revenue was 2260 + 2041 + 1984 + 2064 = $8,349 Mil.
Gross Profit was 1183 + 1036 + 980 + 1038 = $4,237 Mil.
Total Current Assets was $5,024 Mil.
Total Assets was $12,215 Mil.
Property, Plant and Equipment(Net PPE) was $503 Mil.
Depreciation, Depletion and Amortization(DDA) was $417 Mil.
Selling, General & Admin. Expense(SGA) was $715 Mil.
Total Current Liabilities was $1,711 Mil.
Long-Term Debt was $1,593 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)
=(966 / 8484) / (938 / 8349)
=0.11386139 / 0.11234878
=1.0135

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)
=(1157 / 8349) / (1172 / 8484)
=0.50748593 / 0.53583215
=0.9471

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 - (5113 + 656) / 13235) / (1 - (5024 + 503) / 12215)
=0.56411031 / 0.54752354
=1.0303

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
=8484 / 8349
=1.0162

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))
=(417 / (417 + 503)) / (306 / (306 + 656))
=0.45326087 / 0.31808732
=1.425

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)
=(715 / 8484) / (715 / 8349)
=0.08427628 / 0.085639
=0.9841

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)
=((1594 + 1421) / 13235) / ((1593 + 1711) / 12215)
=0.22780506 / 0.27048711
=0.8422

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
=(1414 - 6 - 1893) / 13235
=-0.0366

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.

Broadcom Corp has a M-score of -2.54 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.

Broadcom Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.34670.9070.93620.8181.41721.06130.76331.00731.03560.9966
GMI 0.95461.02910.99150.98081.03390.97951.01781.02470.97880.9883
AQI 0.850.7931.14271.0051.20771.1370.73431.91750.98140.908
SGI 1.11251.37331.02961.23350.9641.51841.08371.08351.03731.0148
DEPI 1.111.55561.08860.83590.93330.92120.99560.71651.18610.9345
SGAI 1.01021.33820.94950.91960.88970.80921.06840.94190.97780.9994
LVGI 0.92750.87111.12521.04241.37211.10621.02471.08070.91641.0024
TATA 0.0073-0.1059-0.1269-0.16-0.1802-0.0373-0.1017-0.109-0.1187-0.1028
M-score -2.08-2.75-3.07-3.21-2.98-2.10-3.22-2.57-2.94-3.00

Broadcom Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.84560.9181.03560.96561.05461.09720.99661.08981.11471.0135
GMI 0.98770.97680.97880.98971.00161.00270.98830.96710.94770.9471
AQI 0.95570.98510.98140.94740.94090.90250.9080.97991.02731.0303
SGI 1.09611.07421.03731.01220.99181.00341.01481.02631.03911.0162
DEPI 0.88661.02271.18611.20031.04820.96250.93451.10051.26911.425
SGAI 0.94760.96510.97781.01061.03851.00940.99940.96890.95440.9841
LVGI 1.08360.97740.91640.93180.9170.96051.00240.92470.96680.8422
TATA -0.137-0.1303-0.1187-0.135-0.1034-0.103-0.1028-0.0501-0.0614-0.0366
M-score -3.23-3.10-2.94-3.12-2.92-2.90-3.00-2.59-2.59-2.54
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