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Broadcom Corp (NAS:BRCM)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

BRCM' s 10-Year Beneish M-Score Range
Min: -6.03   Max: -1.28
Current: -2.9

-6.03
-1.28

During the past 13 years, the highest Beneish M-Score of Broadcom Corp was -1.28. The lowest was -6.03. 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 * 1.0972+0.528 * 1.0027+0.404 * 0.9025+0.892 * 1.0034+0.115 * 0.9625
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0094+4.679 * -0.103-0.327 * 0.9605
=-2.90

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was 98 + -1 + 165 + 168 = $430 Mil.
Non Operating Income was 9 + -8 + 3 + 1 = $5 Mil.
Cash Flow from Operations was 461 + 225 + 606 + 391 = $1,683 Mil.
Accounts Receivable was $852 Mil.
Revenue was 2146 + 2090 + 2005 + 2080 = $8,321 Mil.
Gross Profit was 1102 + 1060 + 1017 + 1055 = $4,234 Mil.
Total Current Assets was $3,927 Mil.
Total Assets was $11,345 Mil.
Property, Plant and Equipment(Net PPE) was $535 Mil.
Depreciation, Depletion and Amortization(DDA) was $414 Mil.
Selling, General & Admin. Expense(SGA) was $706 Mil.
Total Current Liabilities was $1,801 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)
=(938 / 8349) / (852 / 8321)
=0.11234878 / 0.10239154
=1.0972

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)
=(1036 / 8321) / (1183 / 8349)
=0.50883307 / 0.50748593
=1.0027

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 - (5024 + 503) / 12215) / (1 - (3927 + 535) / 11345)
=0.54752354 / 0.60669899
=0.9025

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
=8349 / 8321
=1.0034

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))
=(414 / (414 + 535)) / (417 / (417 + 503))
=0.43624868 / 0.45326087
=0.9625

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 / 8349) / (706 / 8321)
=0.085639 / 0.08484557
=1.0094

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 + 1711) / 12215) / ((1394 + 1801) / 11345)
=0.27048711 / 0.28162186
=0.9605

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
=(430 - 5 - 1683) / 12215
=-0.103

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 -2.90 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.6251.34670.9070.93620.8181.41721.06130.76331.00731.0356
GMI 0.95130.95561.0310.99150.98081.03390.97951.01781.02470.9788
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 0.84631.111.55561.11630.81510.93330.92420.99230.71651.1861
SGAI 0.42250.82521.39750.94950.89361.14190.65061.06560.94190.9778
LVGI 0.69020.920.87821.12521.04241.37211.10621.02471.08070.9164
TATA -0.07060.0185-0.1059-0.1282-0.1173-0.1802-0.0372-0.1017-0.109-0.1187
M-score -2.58-1.99-2.76-3.08-3.01-3.02-2.07-3.22-2.57-2.94

Broadcom Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.17371.02591.00730.890.84560.9181.03560.96561.05461.0972
GMI 1.02381.02461.02471.0150.98770.97680.97880.98971.00161.0027
AQI 1.38391.47461.91750.96490.95570.98510.98140.94740.94090.9025
SGI 1.02871.03081.08351.10591.09611.07421.03731.01220.99181.0034
DEPI 0.85160.79760.71650.73330.88841.02271.18611.20031.04820.9625
SGAI 0.96410.9510.94050.92140.95040.96510.97781.01061.03851.0094
LVGI 1.12591.23921.08071.0811.08360.97740.91640.93180.9170.9605
TATA -0.0985-0.1023-0.109-0.1003-0.137-0.1303-0.1187-0.135-0.1034-0.103
M-score -2.64-2.80-2.57-3.01-3.23-3.10-2.94-3.12-2.92-2.90
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