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Cisco Systems Inc (NAS:CSCO)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

CSCO' s 10-Year Beneish M-Score Range
Min: -3.89   Max: -2.17
Current: -2.75

-3.89
-2.17

During the past 13 years, the highest Beneish M-Score of Cisco Systems Inc was -2.17. The lowest was -3.89. 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 * 0.9721+0.528 * 1.0282+0.404 * 1.0345+0.892 * 0.9699+0.115 * 0.9686
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9992+4.679 * -0.0449-0.327 * 1.102
=-2.75

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $5,157 Mil.
Revenue was 12357 + 11545 + 11155 + 12085 = $47,142 Mil.
Gross Profit was 7405 + 7006 + 5951 + 7407 = $27,769 Mil.
Total Current Assets was $67,114 Mil.
Total Assets was $105,134 Mil.
Property, Plant and Equipment(Net PPE) was $3,252 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,432 Mil.
Selling, General & Admin. Expense(SGA) was $11,437 Mil.
Total Current Liabilities was $19,809 Mil.
Long-Term Debt was $20,401 Mil.
Net Income was 2247 + 2181 + 1429 + 1996 = $7,853 Mil.
Non Operating Income was 56 + 76 + 55 + 56 = $243 Mil.
Cash Flow from Operations was 3612 + 3198 + 2873 + 2649 = $12,332 Mil.
Accounts Receivable was $5,470 Mil.
Revenue was 12417 + 12216 + 12098 + 11876 = $48,607 Mil.
Gross Profit was 7347 + 7511 + 7343 + 7239 = $29,440 Mil.
Total Current Assets was $65,521 Mil.
Total Assets was $101,191 Mil.
Property, Plant and Equipment(Net PPE) was $3,322 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,351 Mil.
Selling, General & Admin. Expense(SGA) was $11,802 Mil.
Total Current Liabilities was $22,192 Mil.
Long-Term Debt was $12,928 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)
=(5157 / 47142) / (5470 / 48607)
=0.1093929 / 0.11253523
=0.9721

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)
=(7006 / 48607) / (7405 / 47142)
=0.60567408 / 0.5890501
=1.0282

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 - (67114 + 3252) / 105134) / (1 - (65521 + 3322) / 101191)
=0.33070177 / 0.3196727
=1.0345

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
=47142 / 48607
=0.9699

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))
=(2351 / (2351 + 3322)) / (2432 / (2432 + 3252))
=0.41441918 / 0.4278677
=0.9686

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)
=(11437 / 47142) / (11802 / 48607)
=0.24260744 / 0.24280453
=0.9992

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)
=((20401 + 19809) / 105134) / ((12928 + 22192) / 101191)
=0.38246428 / 0.34706644
=1.102

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
=(7853 - 243 - 12332) / 105134
=-0.0449

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 -2.75 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 1.02081.02131.0290.99241.0080.99841.0431.00261.01111.0282
AQI 1.02540.63351.02220.95950.90891.08690.9380.96661.11011.0345
SGI 1.1251.14851.2261.13220.91341.10861.07941.06581.05530.9699
DEPI 1.30810.85321.02590.90010.97240.89490.87550.8961.04570.9686
SGAI 0.93551.10370.98871.05111.05060.96961.01340.95820.93440.9992
LVGI 1.1481.45120.90970.93041.01961.10171.00030.95730.93591.102
TATA -0.0559-0.0542-0.0543-0.0685-0.0534-0.0326-0.0428-0.038-0.0284-0.0449
M-score -2.54-2.65-2.49-2.84-2.94-2.17-2.74-2.72-2.30-2.75

Cisco Systems Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.84830.87260.85871.09251.18171.18641.25850.96840.91190.9721
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 0.92590.8960.93730.9060.93821.04571.03891.0431.03040.9686
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 -2.78-2.72-2.64-2.39-2.30-2.30-2.31-2.67-2.80-2.75
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