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Broadcom Corporation (NAS:BRCM)
Beneish M-Score
-2.94 (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 Corporation has a M-score of -2.94 suggests that the company is not a manipulator.

BRCM' s 10-Year Beneish M-Score Range
Min: -5.97   Max: -2.05
Current: -2.94

-5.97
-2.05

During the past 13 years, the highest Beneish M-Score of Broadcom Corporation was -2.05. The lowest was -5.97. And the median was -2.85.


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 Corporation 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 * 1.0356+0.528 * 0.9788+0.404 * 0.9814+0.892 * 1.0373+0.115 * 1.1861
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9778+4.679 * -0.1187-0.327 * 0.9164
=-2.94

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
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.
Net Income was 168 + 316 + -251 + 191 = $424 Mil.
Non Operating Income was 1 + -4 + 3 + 3 = $3 Mil.
Cash Flow from Operations was 391 + 672 + 334 + 388 = $1,785 Mil.
Accounts Receivable was $740 Mil.
Revenue was 2080 + 2128 + 1971 + 1827 = $8,006 Mil.
Gross Profit was 1055 + 1065 + 950 + 909 = $3,979 Mil.
Total Current Assets was $3,781 Mil.
Total Assets was $11,208 Mil.
Property, Plant and Equipment(Net PPE) was $485 Mil.
Depreciation, Depletion and Amortization(DDA) was $445 Mil.
Selling, General & Admin. Expense(SGA) was $696 Mil.
Total Current Liabilities was $1,682 Mil.
Long-Term Debt was $1,393 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)
=(795 / 8305) / (740 / 8006)
=0.09572547 / 0.09243068
=1.0356

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)
=(1102 / 8006) / (1038 / 8305)
=0.49700225 / 0.50776641
=0.9788

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 - (3915 + 593) / 11495) / (1 - (3781 + 485) / 11208)
=0.60782949 / 0.61937901
=0.9814

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
=8305 / 8006
=1.0373

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))
=(445 / (445 + 485)) / (401 / (401 + 593))
=0.47849462 / 0.40342052
=1.1861

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)
=(706 / 8305) / (696 / 8006)
=0.08500903 / 0.0869348
=0.9778

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)
=((1394 + 1496) / 11495) / ((1393 + 1682) / 11208)
=0.25141366 / 0.2743576
=0.9164

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
=(424 - 3 - 1785) / 11495
=-0.1187

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 Corporation has a M-score of -2.94 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 Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.6251.34670.9070.93620.8181.41721.06130.76331.00731.0356
GMI 0.9540.95461.02910.99150.98081.03390.97951.01781.02470.9788
AQI 0.94910.850.7931.14271.0051.20771.1370.73431.91750.9814
SGI 1.4911.11251.37331.02961.23350.9641.51841.08371.08351.0373
DEPI 0.84631.111.55561.08860.83590.93330.92120.99560.71651.1861
SGAI 0.36041.01021.33820.94950.91960.88970.80921.06840.94190.9778
LVGI 0.69020.92750.87111.12521.04241.37211.10621.02471.08070.9164
TATA -0.08640.0073-0.1059-0.1269-0.16-0.1802-0.0373-0.1017-0.109-0.1187
M-score -2.64-2.08-2.75-3.07-3.21-2.98-2.10-3.22-2.57-2.94

Broadcom Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.84660.76330.9731.17361.02591.00730.890.84560.9181.0356
GMI 1.02871.01781.0151.02391.02471.02471.01480.98770.97680.9788
AQI 1.19810.73431.31971.38391.47461.91750.96490.95570.98510.9814
SGI 1.20891.08371.03181.02881.03091.08351.10591.09611.07421.0373
DEPI 0.93750.99560.97360.86040.79950.71650.73330.88661.02271.1861
SGAI 1.13421.06841.04090.97490.95330.94190.92280.94760.96510.9778
LVGI 1.19121.02471.06031.12591.23921.08071.0811.08360.97740.9164
TATA -0.106-0.1017-0.1143-0.0985-0.1023-0.109-0.1003-0.137-0.1303-0.1187
M-score -2.93-3.22-2.90-2.64-2.80-2.57-3.01-3.23-3.10-2.94
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