Switch to:
Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

CSCO' s 10-Year Beneish M-Score Range
Min: -4.14   Max: -1.57
Current: -2.64

-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 -2.64.


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 * 0.9915+0.528 * 1.0354+0.404 * 1.0476+0.892 * 1.0131+0.115 * 1.0436
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9451+4.679 * -0.0463-0.327 * 1.0114
=-2.64

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $8,394 Mil.
Revenue was 11155 + 12085 + 12417 + 12216 = $47,873 Mil.
Gross Profit was 5951 + 7407 + 7347 + 7511 = $28,216 Mil.
Total Current Assets was $60,689 Mil.
Total Assets was $98,427 Mil.
Property, Plant and Equipment(Net PPE) was $3,234 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,331 Mil.
Selling, General & Admin. Expense(SGA) was $11,509 Mil.
Total Current Liabilities was $22,944 Mil.
Long-Term Debt was $12,385 Mil.
Net Income was 1429 + 1996 + 2270 + 2478 = $8,173 Mil.
Non Operating Income was 55 + 56 + 29 + -14 = $126 Mil.
Cash Flow from Operations was 2873 + 2649 + 3986 + 3094 = $12,602 Mil.
Accounts Receivable was $8,356 Mil.
Revenue was 12098 + 11876 + 11690 + 11588 = $47,252 Mil.
Gross Profit was 7343 + 7239 + 7085 + 7169 = $28,836 Mil.
Total Current Assets was $60,725 Mil.
Total Assets was $96,378 Mil.
Property, Plant and Equipment(Net PPE) was $3,403 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,643 Mil.
Selling, General & Admin. Expense(SGA) was $12,020 Mil.
Total Current Liabilities was $17,950 Mil.
Long-Term Debt was $16,254 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)
=(8394 / 47873) / (8356 / 47252)
=0.17533892 / 0.17683908
=0.9915

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)
=(7407 / 47252) / (5951 / 47873)
=0.61025988 / 0.58939277
=1.0354

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 - (60689 + 3234) / 98427) / (1 - (60725 + 3403) / 96378)
=0.35055422 / 0.33461993
=1.0476

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
=47873 / 47252
=1.0131

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))
=(2643 / (2643 + 3403)) / (2331 / (2331 + 3234))
=0.43714853 / 0.41886792
=1.0436

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)
=(11509 / 47873) / (12020 / 47252)
=0.24040691 / 0.25438077
=0.9451

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)
=((12385 + 22944) / 98427) / ((16254 + 17950) / 96378)
=0.35893606 / 0.35489427
=1.0114

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
=(8173 - 126 - 12602) / 98427
=-0.0463

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 -2.64 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

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.62381.51771.63880.96480.9451.06831.09171.12191.16230.9915
GMI 1.04051.01871.00551.00260.99711.0041.00781.01111.00871.0354
AQI 0.93150.93140.9430.96661.13351.13781.15411.11011.01781.0476
SGI 1.04681.05861.06321.06581.06761.05371.05081.05531.04571.0131
DEPI 0.86660.9250.92590.8960.93670.90540.93751.0451.03961.0436
SGAI 1.01740.97770.96320.95820.94270.96180.95860.93440.94110.9451
LVGI 1.02291.01550.96920.95730.92930.93450.9560.93590.95511.0114
TATA -0.0516-0.0479-0.0429-0.038-0.0351-0.0261-0.0236-0.0284-0.0322-0.0463
M-score -2.14-2.20-2.05-2.63-2.56-2.42-2.38-2.36-2.40-2.64
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide