Switch to:
Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.71 (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 -2.60 suggests that the company is not a manipulator.

CSCO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.27   Max: -1.9
Current: -2.71

-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 -2.69.


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 * 1.0272+0.528 * 0.9622+0.404 * 0.9338+0.892 * 1.0485+0.115 * 1.0442
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.978+4.679 * -0.0312-0.327 * 1.0246
=-2.60

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $4,712 Mil.
Revenue was 12682 + 12843 + 12137 + 11936 = $49,598 Mil.
Gross Profit was 7832 + 7733 + 7525 + 7090 = $30,180 Mil.
Total Current Assets was $73,946 Mil.
Total Assets was $111,773 Mil.
Property, Plant and Equipment(Net PPE) was $3,346 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,350 Mil.
Selling, General & Admin. Expense(SGA) was $11,824 Mil.
Total Current Liabilities was $22,100 Mil.
Long-Term Debt was $21,594 Mil.
Net Income was 2430 + 2319 + 2437 + 2397 = $9,583 Mil.
Non Operating Income was -8 + -10 + 59 + 201 = $242 Mil.
Cash Flow from Operations was 2766 + 4138 + 3040 + 2883 = $12,827 Mil.
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 $2,447 Mil.
Selling, General & Admin. Expense(SGA) was $11,530 Mil.
Total Current Liabilities was $20,056 Mil.
Long-Term Debt was $19,615 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)
=(4712 / 49598) / (4375 / 47302)
=0.09500383 / 0.0924908
=1.0272

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)
=(7733 / 47302) / (7832 / 49598)
=0.58549321 / 0.60849228
=0.9622

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 - (73946 + 3346) / 111773) / (1 - (66396 + 3233) / 103978)
=0.30849132 / 0.33034873
=0.9338

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
=49598 / 47302
=1.0485

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))
=(2447 / (2447 + 3233)) / (2350 / (2350 + 3346))
=0.43080986 / 0.41257022
=1.0442

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)
=(11824 / 49598) / (11530 / 47302)
=0.23839671 / 0.24375291
=0.978

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)
=((21594 + 22100) / 111773) / ((19615 + 20056) / 103978)
=0.39091731 / 0.38153263
=1.0246

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
=(9583 - 242 - 12827) / 111773
=-0.0312

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 -2.60 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

Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15
DSRI 1.29780.9850.8460.91031.39950.8830.87261.18640.97210.9937
GMI 1.02131.0290.99781.00250.99841.0431.00261.01111.02820.9757
AQI 1.29861.02220.95950.90891.08690.9380.96661.11011.03320.9035
SGI 1.14851.2261.13220.91341.10861.07941.06581.05530.96991.0428
DEPI 0.85321.02590.90010.97240.89490.87550.8961.02080.99061.0133
SGAI 1.10370.98871.01971.08290.96961.01340.95820.93440.99920.9945
LVGI 1.45120.90970.93041.01961.10171.00030.95730.93071.10711.0397
TATA -0.0542-0.0543-0.0685-0.0534-0.0326-0.0428-0.038-0.0284-0.0449-0.0335
M-score -2.38-2.49-2.83-2.95-2.17-2.74-2.72-2.31-2.75-2.67

Cisco Systems Inc Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 1.18641.25850.96840.91190.97210.87031.03271.06710.99371.0272
GMI 1.01111.00871.03541.0381.02821.03590.98290.97350.97570.9622
AQI 1.11011.01781.04761.00981.03320.95980.91970.94070.90350.9338
SGI 1.05531.04571.01310.98580.96990.9691.00441.03121.04281.0485
DEPI 1.02081.01531.02221.04860.99060.98830.98730.99221.01331.0442
SGAI 0.93440.94110.94510.96580.99921.01251.00350.99960.99450.978
LVGI 0.93070.95511.01141.08991.10711.10851.05420.9821.03971.0246
TATA -0.0284-0.0322-0.0463-0.0495-0.0449-0.0448-0.0366-0.0321-0.0335-0.0312
M-score -2.31-2.31-2.67-2.80-2.75-2.87-2.68-2.57-2.67-2.60
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)

GuruFocus Premium Plus Membership

FEEDBACK