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Exar Corp (NYSE:EXAR)
Beneish M-Score
-0.62 (As of Today)

Warning Sign:

Beneish M-Score -0.62 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Exar Corp has a M-score of -0.62 signals that the company is a manipulator.

EXAR' s 10-Year Beneish M-Score Range
Min: -5.13   Max: 4.06
Current: -0.62

-5.13
4.06

During the past 13 years, the highest Beneish M-Score of Exar Corp was 4.06. The lowest was -5.13. And the median was -2.65.


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 Exar Corp 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 * 1.5562+0.528 * 1.2436+0.404 * 4.9241+0.892 * 0.9841+0.115 * 1.3163
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1183+4.679 * 0.0038-0.327 * 2.177
=-0.62

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $29.1 Mil.
Revenue was 30.719 + 27.987 + 30.69 + 34.018 = $123.4 Mil.
Gross Profit was 10.956 + 8.422 + 12.826 + 13.929 = $46.1 Mil.
Total Current Assets was $216.0 Mil.
Total Assets was $392.1 Mil.
Property, Plant and Equipment(Net PPE) was $20.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $35.3 Mil.
Total Current Liabilities was $117.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -12.105 + 0.147 + -1.634 + 6.482 = $-7.1 Mil.
Non Operating Income was 0 + -0.323 + 0 + 0 = $-0.3 Mil.
Cash Flow from Operations was -8.137 + 1.708 + -5.409 + 3.569 = $-8.3 Mil.
Accounts Receivable was $19.0 Mil.
Revenue was 32.627 + 31.154 + 30.999 + 30.622 = $125.4 Mil.
Gross Profit was 15.477 + 15.296 + 14.192 + 13.33 = $58.3 Mil.
Total Current Assets was $260.1 Mil.
Total Assets was $293.7 Mil.
Property, Plant and Equipment(Net PPE) was $9.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.6 Mil.
Selling, General & Admin. Expense(SGA) was $32.1 Mil.
Total Current Liabilities was $39.3 Mil.
Long-Term Debt was $1.0 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)
=(29.12 / 123.414) / (19.014 / 125.402)
=0.23595378 / 0.15162438
=1.5562

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)
=(8.422 / 125.402) / (10.956 / 123.414)
=0.46486499 / 0.37380686
=1.2436

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 - (215.986 + 20.644) / 392.136) / (1 - (260.132 + 9.87) / 293.651)
=0.3965614 / 0.08053438
=4.9241

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
=123.414 / 125.402
=0.9841

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))
=(10.617 / (10.617 + 9.87)) / (13.406 / (13.406 + 20.644))
=0.51823107 / 0.39371512
=1.3163

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)
=(35.331 / 123.414) / (32.103 / 125.402)
=0.28628032 / 0.2560007
=1.1183

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)
=((0.04 + 117.11) / 392.136) / ((1.012 + 39.285) / 293.651)
=0.29874839 / 0.13722753
=2.177

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
=(-7.11 - -0.323 - -8.269) / 392.136
=0.0038

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.

Exar Corp has a M-score of -0.62 signals that the company is likely to 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.

Exar Corp Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 0.63452.64050.78321.39090.41091.64130.67370.98051.50431.1165
GMI 0.95851.0060.99881.51981.02410.92881.07211.02350.93841.1291
AQI 1.12661.91290.97353.12260.15134.41490.57310.77421.59662.4298
SGI 0.85381.16831.02211.31011.28281.17161.08250.89430.93461.027
DEPI 0.8910.94930.99980.79840.84720.77610.9660.96881.12710.8186
SGAI 1.24780.88211.14541.16060.80141.07030.8590.95650.89570.9894
LVGI 0.83031.31210.98472.44611.54921.29791.00510.92910.91260.9866
TATA -0.0142-0.0087-0.0324-0.1035-0.2215-0.0943-0.1095-0.0974-0.01530.0174
M-score -2.98-0.58-2.84-1.72-4.30-0.97-3.33-3.10-1.88-1.64

Exar Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.98050.99111.35211.47171.50431.2731.11361.43581.11651.5562
GMI 1.02351.02321.04451.03320.93840.90960.90470.92961.12911.2436
AQI 0.77420.77330.65490.65121.59661.57194.33184.61182.42984.9241
SGI 0.89430.85690.8250.8690.93461.02091.09761.08281.0270.9841
DEPI 0.96881.16151.14360.91911.12710.68880.64020.62120.81861.3163
SGAI 0.95651.02741.06030.980.89570.8490.87690.93380.9761.1183
LVGI 0.92911.03881.07990.95630.91260.96360.96090.93420.98662.177
TATA -0.0974-0.0793-0.0704-0.0685-0.0153-0.0216-0.00450.01450.01740.0038
M-score -3.10-3.07-2.78-2.60-1.88-2.13-1.02-0.53-1.63-0.62
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