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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 -2.73 suggests that the company is not a manipulator.
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 -2.65.
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 * 0.9792||+||0.528 * 1.038||+||0.404 * 1.0098||+||0.892 * 0.9858||+||0.115 * 1.0749|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9658||+||4.679 * -0.0495||-||0.327 * 1.0899|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $8,514 Mil.|
Revenue was 11545 + 11155 + 12085 + 12417 = $47,202 Mil.
Gross Profit was 7006 + 5951 + 7407 + 7347 = $27,711 Mil.
Total Current Assets was $64,288 Mil.
Total Assets was $101,856 Mil.
Property, Plant and Equipment(Net PPE) was $3,310 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,311 Mil.
Selling, General & Admin. Expense(SGA) was $11,406 Mil.
Total Current Liabilities was $18,515 Mil.
Long-Term Debt was $20,384 Mil.
Net Income was 2181 + 1429 + 1996 + 2270 = $7,876 Mil.
Non Operating Income was 76 + 55 + 56 + 29 = $216 Mil.
Cash Flow from Operations was 3198 + 2873 + 2649 + 3986 = $12,706 Mil.
|Accounts Receivable was $8,820 Mil.
Revenue was 12216 + 12098 + 11876 + 11690 = $47,880 Mil.
Gross Profit was 7511 + 7343 + 7239 + 7085 = $29,178 Mil.
Total Current Assets was $61,417 Mil.
Total Assets was $97,084 Mil.
Property, Plant and Equipment(Net PPE) was $3,330 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,637 Mil.
Selling, General & Admin. Expense(SGA) was $11,980 Mil.
Total Current Liabilities was $21,063 Mil.
Long-Term Debt was $12,956 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(8514 / 47202)||/||(8820 / 47880)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(5951 / 47880)||/||(7006 / 47202)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (64288 + 3310) / 101856)||/||(1 - (61417 + 3330) / 97084)|
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.
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))|
|=||(2637 / (2637 + 3330))||/||(2311 / (2311 + 3310))|
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)|
|=||(11406 / 47202)||/||(11980 / 47880)|
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)|
|=||((20384 + 18515) / 101856)||/||((12956 + 21063) / 97084)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(7876 - 216||-||12706)||/||101856|
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 -2.73 suggests that the company will not be a manipulator.
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
Cisco Systems Inc Annual Data
Cisco Systems Inc Quarterly Data