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Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

CSCO' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -1.9
Current: -2.87

-4.27
-1.9

During the past 13 years, the highest Beneish M-Score of Cisco Systems Inc was -1.90. The lowest was -4.27. And the median was -2.71.


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 * 0.8703+0.528 * 1.0359+0.404 * 0.9598+0.892 * 0.969+0.115 * 0.9907
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0125+4.679 * -0.0448-0.327 * 1.1085
=-2.87

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $4,375 Mil.
Revenue was 12245 + 12357 + 11545 + 11155 = $47,302 Mil.
Gross Profit was 7333 + 7405 + 7006 + 5951 = $27,695 Mil.
Total Current Assets was $66,396 Mil.
Total Assets was $103,978 Mil.
Property, Plant and Equipment(Net PPE) was $3,233 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,437 Mil.
Selling, General & Admin. Expense(SGA) was $11,530 Mil.
Total Current Liabilities was $20,056 Mil.
Long-Term Debt was $19,615 Mil.
Net Income was 1828 + 2247 + 2181 + 1429 = $7,685 Mil.
Non Operating Income was -22 + 56 + 76 + 55 = $165 Mil.
Cash Flow from Operations was 2491 + 3612 + 3198 + 2873 = $12,174 Mil.
Accounts Receivable was $5,188 Mil.
Revenue was 12085 + 12417 + 12216 + 12098 = $48,816 Mil.
Gross Profit was 7407 + 7347 + 7511 + 7343 = $29,608 Mil.
Total Current Assets was $62,796 Mil.
Total Assets was $100,741 Mil.
Property, Plant and Equipment(Net PPE) was $3,273 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,427 Mil.
Selling, General & Admin. Expense(SGA) was $11,752 Mil.
Total Current Liabilities was $21,728 Mil.
Long-Term Debt was $12,947 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)
=(4375 / 47302) / (5188 / 48816)
=0.0924908 / 0.10627663
=0.8703

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)
=(7405 / 48816) / (7333 / 47302)
=0.60652245 / 0.58549321
=1.0359

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 - (66396 + 3233) / 103978) / (1 - (62796 + 3273) / 100741)
=0.33034873 / 0.3441697
=0.9598

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
=47302 / 48816
=0.969

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 + 3273)) / (2437 / (2437 + 3233))
=0.42578947 / 0.429806
=0.9907

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)
=(11530 / 47302) / (11752 / 48816)
=0.24375291 / 0.24074074
=1.0125

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)
=((19615 + 20056) / 103978) / ((12947 + 21728) / 100741)
=0.38153263 / 0.34419948
=1.1085

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
=(7685 - 165 - 12174) / 103978
=-0.0448

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 -2.87 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

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
DSRI 1.07931.29780.9850.8460.91031.39950.8830.87261.18640.9721
GMI 1.02081.02131.0290.99781.00250.99841.0431.00261.01111.0282
AQI 0.50021.29861.02220.95950.90891.08690.9380.96661.11011.0345
SGI 1.1251.14851.2261.13220.91341.10861.07941.06581.05530.9699
DEPI 1.30810.85321.02590.90010.97240.89490.87550.8961.02080.9923
SGAI 0.93551.10370.98871.01971.08290.96961.01340.95820.93440.9992
LVGI 1.1481.45120.90970.93041.01961.10171.00030.95730.93071.1082
TATA -0.0559-0.0542-0.0543-0.0685-0.0534-0.0326-0.0428-0.038-0.0284-0.0449
M-score -2.75-2.38-2.49-2.83-2.95-2.17-2.74-2.72-2.31-2.75

Cisco Systems Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.87260.85871.09251.18171.18641.25850.96840.91190.97210.8703
GMI 1.00260.99711.0041.00781.01111.00871.03541.0381.02821.0359
AQI 0.96661.13351.13781.15411.11011.01781.04761.00981.03450.9598
SGI 1.06581.06761.05371.05081.05531.04571.01310.98580.96990.969
DEPI 0.8960.93670.90430.91981.02081.01531.02221.04860.99230.9907
SGAI 0.95820.94270.96180.95860.93440.94110.94510.96580.99921.0125
LVGI 0.95730.92930.93450.9560.93070.95511.01141.08991.10821.1085
TATA -0.038-0.0351-0.0261-0.0236-0.0284-0.0322-0.0463-0.0495-0.0449-0.0448
M-score -2.72-2.64-2.39-2.30-2.31-2.31-2.67-2.80-2.75-2.87
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