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Broadcom Corp (NAS:BRCM)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

BRCM' s 10-Year Beneish M-Score Range
Min: -5.97   Max: -1.28
Current: -2.59

-5.97
-1.28

During the past 13 years, the highest Beneish M-Score of Broadcom Corp was -1.28. 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 * 1.1147+0.528 * 0.9477+0.404 * 1.0273+0.892 * 1.0391+0.115 * 1.2691
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9544+4.679 * -0.0614-0.327 * 0.9668
=-2.59

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $922 Mil.
Revenue was 2096 + 2058 + 2143 + 2260 = $8,557 Mil.
Gross Profit was 1157 + 1086 + 1131 + 1183 = $4,557 Mil.
Total Current Assets was $4,863 Mil.
Total Assets was $12,990 Mil.
Property, Plant and Equipment(Net PPE) was $626 Mil.
Depreciation, Depletion and Amortization(DDA) was $330 Mil.
Selling, General & Admin. Expense(SGA) was $714 Mil.
Total Current Liabilities was $1,546 Mil.
Long-Term Debt was $1,594 Mil.
Net Income was 386 + 209 + 390 + 98 = $1,083 Mil.
Non Operating Income was -5 + 0 + 5 + 9 = $9 Mil.
Cash Flow from Operations was 802 + -25 + 633 + 461 = $1,871 Mil.
Accounts Receivable was $796 Mil.
Revenue was 2041 + 1984 + 2064 + 2146 = $8,235 Mil.
Gross Profit was 1036 + 980 + 1038 + 1102 = $4,156 Mil.
Total Current Assets was $4,702 Mil.
Total Assets was $11,971 Mil.
Property, Plant and Equipment(Net PPE) was $540 Mil.
Depreciation, Depletion and Amortization(DDA) was $421 Mil.
Selling, General & Admin. Expense(SGA) was $720 Mil.
Total Current Liabilities was $1,598 Mil.
Long-Term Debt was $1,395 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)
=(922 / 8557) / (796 / 8235)
=0.10774804 / 0.0966606
=1.1147

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)
=(1086 / 8235) / (1157 / 8557)
=0.50467517 / 0.53254645
=0.9477

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 - (4863 + 626) / 12990) / (1 - (4702 + 540) / 11971)
=0.57744419 / 0.56210843
=1.0273

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
=8557 / 8235
=1.0391

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))
=(421 / (421 + 540)) / (330 / (330 + 626))
=0.43808533 / 0.34518828
=1.2691

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)
=(714 / 8557) / (720 / 8235)
=0.08344046 / 0.08743169
=0.9544

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 + 1546) / 12990) / ((1395 + 1598) / 11971)
=0.2417244 / 0.25002088
=0.9668

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
=(1083 - 9 - 1871) / 12990
=-0.0614

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 -2.59 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 1.111.55561.08860.83590.93330.92420.99230.71651.18610.9345
SGAI 1.01021.33820.94950.91961.10960.65061.06560.94190.97780.9994
LVGI 0.92750.87111.12521.04241.37211.10621.02471.08070.91641.0024
TATA 0.0073-0.1059-0.1269-0.16-0.1802-0.0372-0.1017-0.109-0.1187-0.1028
M-score -2.08-2.75-3.07-3.21-3.02-2.07-3.22-2.57-2.94-3.00

Broadcom Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.890.84560.9181.03560.96561.05461.09720.99661.08981.1147
GMI 1.0150.98770.97680.97880.98971.00161.00270.98830.96710.9477
AQI 0.96490.95570.98510.98140.94740.94090.90250.9080.97991.0273
SGI 1.10591.09611.07421.03731.01220.99181.00341.01481.02631.0391
DEPI 0.73330.88841.02271.18611.20031.04820.96250.93451.10051.2691
SGAI 0.92140.95040.96510.97781.01061.03851.00940.99940.96890.9544
LVGI 1.0811.08360.97740.91640.93180.9170.96051.00240.92470.9668
TATA -0.1003-0.137-0.1303-0.1187-0.135-0.1034-0.103-0.1028-0.0501-0.0614
M-score -3.01-3.23-3.10-2.94-3.12-2.92-2.90-3.00-2.59-2.59
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