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Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

CSCO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.31   Max: -1.9
Current: -2.81

-4.31
-1.9

During the past 13 years, the highest Beneish M-Score of Cisco Systems Inc was -1.90. The lowest was -4.31. And the median was -2.69.


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 * 0.8148+0.528 * 0.9708+0.404 * 0.9737+0.892 * 1.016+0.115 * 1.1116
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9663+4.679 * -0.0301-0.327 * 1.0885
=-2.81

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

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $4,047 Mil.
Revenue was 12000 + 11927 + 12682 + 12843 = $49,452 Mil.
Gross Profit was 7721 + 7432 + 7832 + 7733 = $30,718 Mil.
Total Current Assets was $78,571 Mil.
Total Assets was $118,654 Mil.
Property, Plant and Equipment(Net PPE) was $3,529 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,189 Mil.
Selling, General & Admin. Expense(SGA) was $11,542 Mil.
Total Current Liabilities was $24,003 Mil.
Long-Term Debt was $24,431 Mil.
Net Income was 2349 + 3147 + 2430 + 2319 = $10,245 Mil.
Non Operating Income was 4 + -63 + -8 + -10 = $-77 Mil.
Cash Flow from Operations was 3064 + 3922 + 2766 + 4138 = $13,890 Mil.
Accounts Receivable was $4,889 Mil.
Revenue was 12137 + 11936 + 12245 + 12357 = $48,675 Mil.
Gross Profit was 7525 + 7090 + 7333 + 7405 = $29,353 Mil.
Total Current Assets was $69,331 Mil.
Total Assets was $106,212 Mil.
Property, Plant and Equipment(Net PPE) was $3,276 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,427 Mil.
Selling, General & Admin. Expense(SGA) was $11,757 Mil.
Total Current Liabilities was $23,245 Mil.
Long-Term Debt was $16,586 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)
=(4047 / 49452) / (4889 / 48675)
=0.08183693 / 0.10044171
=0.8148

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)
=(29353 / 48675) / (30718 / 49452)
=0.60304058 / 0.621168
=0.9708

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 - (78571 + 3529) / 118654) / (1 - (69331 + 3276) / 106212)
=0.30807221 / 0.31639551
=0.9737

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
=49452 / 48675
=1.016

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))
=(2427 / (2427 + 3276)) / (2189 / (2189 + 3529))
=0.42556549 / 0.38282616
=1.1116

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)
=(11542 / 49452) / (11757 / 48675)
=0.23339804 / 0.24154083
=0.9663

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)
=((24431 + 24003) / 118654) / ((16586 + 23245) / 106212)
=0.40819526 / 0.37501412
=1.0885

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
=(10245 - -77 - 13890) / 118654
=-0.0301

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 -2.81 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

Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15Jul16
DSRI 0.9850.8460.91031.39950.8830.87261.18640.97210.99371.0922
GMI 1.0290.99781.00250.99841.0431.00261.01111.02820.97570.9604
AQI 1.02220.95950.90891.08690.9380.96661.11011.03320.90351.086
SGI 1.2261.13220.91341.10861.07941.06581.05530.96991.04281.0017
DEPI 1.02590.90010.97240.89490.87550.98660.92510.99271.01331.1126
SGAI 0.98871.01971.08290.96961.01340.95820.93440.99920.99450.9622
LVGI 0.90970.93041.01961.10171.00030.95730.93071.10711.03971.0221
TATA -0.0543-0.0685-0.0534-0.0326-0.0428-0.038-0.0284-0.0449-0.0335-0.0227
M-score -2.49-2.83-2.95-2.17-2.74-2.71-2.32-2.75-2.67-2.47

Cisco Systems Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 0.91190.97210.87031.03271.06710.99371.02720.91860.81481.0922
GMI 1.0381.02821.03590.98290.97350.97570.96220.97430.97080.9604
AQI 1.00981.03320.95980.91970.94070.90350.93380.94310.97371.086
SGI 0.98580.96990.9691.00441.03121.04281.04851.03131.0161.0017
DEPI 0.9530.99270.99040.98830.99241.01331.04421.09711.11161.1126
SGAI 0.96580.99921.01251.00350.99960.99450.9780.96030.96630.9622
LVGI 1.08991.10711.10851.05420.9821.03971.02461.04151.08851.0221
TATA -0.0495-0.0449-0.0448-0.0366-0.0321-0.0335-0.0312-0.0312-0.0301-0.0227
M-score -2.81-2.75-2.87-2.68-2.57-2.67-2.60-2.71-2.81-2.47
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