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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 0.00. The lowest was 0.00. And the median was 0.00.
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|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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
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)|
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)|
|=||(4237 / 8349)||/||(4546 / 8484)|
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 - (5113 + 656) / 13235)||/||(1 - (5024 + 503) / 12215)|
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))|
|=||(417 / (417 + 503))||/||(306 / (306 + 656))|
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)|
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)|
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|
|=||(1414 - 6||-||1893)||/||13235|
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.
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