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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.
During the past 13 years, the highest Beneish M-Score of Broadcom Corp was -2.05. The lowest was -5.97. And the median was -2.94.
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 * 0.9966||+||0.528 * 0.9883||+||0.404 * 0.908||+||0.892 * 1.0148||+||0.115 * 0.9345|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9994||+||4.679 * -0.1028||-||0.327 * 1.0024|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $804 Mil.|
Revenue was 2143 + 2260 + 2041 + 1984 = $8,428 Mil.
Gross Profit was 1131 + 1183 + 1036 + 980 = $4,330 Mil.
Total Current Assets was $5,072 Mil.
Total Assets was $12,471 Mil.
Property, Plant and Equipment(Net PPE) was $516 Mil.
Depreciation, Depletion and Amortization(DDA) was $392 Mil.
Selling, General & Admin. Expense(SGA) was $716 Mil.
Total Current Liabilities was $1,550 Mil.
Long-Term Debt was $1,593 Mil.
Net Income was 390 + 98 + -1 + 165 = $652 Mil.
Non Operating Income was 5 + 9 + -8 + 3 = $9 Mil.
Cash Flow from Operations was 633 + 461 + 225 + 606 = $1,925 Mil.
|Accounts Receivable was $795 Mil.
Revenue was 2064 + 2146 + 2090 + 2005 = $8,305 Mil.
Gross Profit was 1038 + 1102 + 1060 + 1017 = $4,217 Mil.
Total Current Assets was $3,915 Mil.
Total Assets was $11,495 Mil.
Property, Plant and Equipment(Net PPE) was $593 Mil.
Depreciation, Depletion and Amortization(DDA) was $401 Mil.
Selling, General & Admin. Expense(SGA) was $706 Mil.
Total Current Liabilities was $1,496 Mil.
Long-Term Debt was $1,394 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(804 / 8428)||/||(795 / 8305)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1183 / 8305)||/||(1131 / 8428)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (5072 + 516) / 12471)||/||(1 - (3915 + 593) / 11495)|
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.
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))|
|=||(401 / (401 + 593))||/||(392 / (392 + 516))|
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)|
|=||(716 / 8428)||/||(706 / 8305)|
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)|
|=||((1593 + 1550) / 12471)||/||((1394 + 1496) / 11495)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(652 - 9||-||1925)||/||12471|
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 -3.00 suggests that the company will not be a manipulator.
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
Broadcom Corp Annual Data
Broadcom Corp Quarterly Data