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Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.73 (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.

Cisco Systems Inc has a M-score of -2.73 suggests that the company is not a manipulator.

CSCO' s 10-Year Beneish M-Score Range
Min: -4.14   Max: -1.57
Current: -2.73

-4.14
-1.57

During the past 13 years, the highest Beneish M-Score of Cisco Systems Inc was -1.57. The lowest was -4.14. And the median was -2.65.


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 Cisco Systems Inc 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 * 0.9792+0.528 * 1.038+0.404 * 1.0098+0.892 * 0.9858+0.115 * 1.0749
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9658+4.679 * -0.0495-0.327 * 1.0899
=-2.73

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $8,514 Mil.
Revenue was 11545 + 11155 + 12085 + 12417 = $47,202 Mil.
Gross Profit was 7006 + 5951 + 7407 + 7347 = $27,711 Mil.
Total Current Assets was $64,288 Mil.
Total Assets was $101,856 Mil.
Property, Plant and Equipment(Net PPE) was $3,310 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,311 Mil.
Selling, General & Admin. Expense(SGA) was $11,406 Mil.
Total Current Liabilities was $18,515 Mil.
Long-Term Debt was $20,384 Mil.
Net Income was 2181 + 1429 + 1996 + 2270 = $7,876 Mil.
Non Operating Income was 76 + 55 + 56 + 29 = $216 Mil.
Cash Flow from Operations was 3198 + 2873 + 2649 + 3986 = $12,706 Mil.
Accounts Receivable was $8,820 Mil.
Revenue was 12216 + 12098 + 11876 + 11690 = $47,880 Mil.
Gross Profit was 7511 + 7343 + 7239 + 7085 = $29,178 Mil.
Total Current Assets was $61,417 Mil.
Total Assets was $97,084 Mil.
Property, Plant and Equipment(Net PPE) was $3,330 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,637 Mil.
Selling, General & Admin. Expense(SGA) was $11,980 Mil.
Total Current Liabilities was $21,063 Mil.
Long-Term Debt was $12,956 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)
=(8514 / 47202) / (8820 / 47880)
=0.18037371 / 0.18421053
=0.9792

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)
=(5951 / 47880) / (7006 / 47202)
=0.6093985 / 0.58707258
=1.038

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 - (64288 + 3310) / 101856) / (1 - (61417 + 3330) / 97084)
=0.33633757 / 0.33308269
=1.0098

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
=47202 / 47880
=0.9858

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))
=(2637 / (2637 + 3330)) / (2311 / (2311 + 3310))
=0.44193062 / 0.41113681
=1.0749

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)
=(11406 / 47202) / (11980 / 47880)
=0.2416423 / 0.25020886
=0.9658

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)
=((20384 + 18515) / 101856) / ((12956 + 21063) / 97084)
=0.3819019 / 0.35040789
=1.0899

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
=(7876 - 216 - 12706) / 101856
=-0.0495

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.

Cisco Systems Inc has a M-score of -2.73 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.

Cisco Systems Inc Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
DSRI 1.11631.07931.29780.9850.8460.91032.05331.00040.96481.1219
GMI 1.02161.02081.02131.0290.99781.00250.99841.0431.00261.0111
AQI 0.93120.50021.29861.02220.95950.90891.08690.9380.96661.1101
SGI 1.16781.1251.14851.2261.13220.91341.10861.07941.06581.0553
DEPI 0.9971.30810.85321.02590.90010.97240.89490.87550.8961.0457
SGAI 0.95920.93551.10370.98871.01971.08290.96961.01340.95820.9344
LVGI 1.09391.1481.45120.90970.93041.01961.10171.00030.95730.9359
TATA -0.0817-0.0559-0.0542-0.0543-0.0685-0.0534-0.0326-0.0428-0.038-0.0284
M-score -2.65-2.75-2.38-2.49-2.83-2.95-1.57-2.63-2.63-2.36

Cisco Systems Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 1.63880.96480.9451.06831.09171.12191.16230.99150.97921.0097
GMI 1.00551.00260.99711.0041.00781.01111.00871.03541.0381.0282
AQI 0.9430.96661.13351.13781.15411.11011.01781.04761.00981.0345
SGI 1.06321.06581.06761.05371.05081.05531.04571.01310.98580.9699
DEPI 0.92590.8960.93670.90430.91981.04571.04041.04731.07490.9686
SGAI 0.96320.95820.94270.96180.95860.93440.94110.94510.96580.9992
LVGI 0.96920.95730.92930.93450.9560.93590.95511.01141.08991.102
TATA -0.0429-0.038-0.0351-0.0261-0.0236-0.0284-0.0322-0.0463-0.0495-0.0449
M-score -2.05-2.63-2.56-2.42-2.38-2.36-2.40-2.64-2.73-2.72
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