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Broadcom Corp (NAS:BRCM)
Beneish M-Score
-3.00 (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 -3.00 suggests that the company is not a manipulator.

BRCM' s 10-Year Beneish M-Score Range
Min: -5.97   Max: -2.05
Current: -3

-5.97
-2.05

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.


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 * 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
=-3.00

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

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

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)
=(804 / 8428) / (795 / 8305)
=0.0953963 / 0.09572547
=0.9966

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)
=(1183 / 8305) / (1131 / 8428)
=0.50776641 / 0.51376364
=0.9883

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 - (5072 + 516) / 12471) / (1 - (3915 + 593) / 11495)
=0.55192046 / 0.60782949
=0.908

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
=8428 / 8305
=1.0148

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))
=0.40342052 / 0.43171806
=0.9345

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)
=0.08495491 / 0.08500903
=0.9994

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)
=0.2520247 / 0.25141366
=1.0024

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
=(652 - 9 - 1925) / 12471
=-0.1028

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.


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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.02591.00730.890.84560.9181.03560.96561.05461.09720.9966
GMI 1.02471.02471.01480.98770.97680.97880.98971.00161.00270.9883
AQI 1.47461.91750.96490.95570.98510.98140.94740.94090.90250.908
SGI 1.03091.08351.10591.09611.07421.03731.01220.99181.00341.0148
DEPI 0.79950.71650.73330.88661.02271.18611.20031.04820.96250.9345
SGAI 0.95330.94190.92280.94760.96510.97781.01061.03851.00940.9994
LVGI 1.23921.08071.0811.08360.97740.91640.93180.9170.96051.0024
TATA -0.1023-0.109-0.1003-0.137-0.1303-0.1187-0.135-0.1034-0.103-0.1028
M-score -2.80-2.57-3.01-3.23-3.10-2.94-3.12-2.92-2.90-3.00
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