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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.
During the past 13 years, the highest Beneish M-Score of Exar Corp was -0.04. The lowest was -4.17. And the median was -2.78.
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 * 1.1677||+||0.528 * 0.7727||+||0.404 * 0.9282||+||0.892 * 0.9218||+||0.115 * 0.8484|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9796||+||4.679 * -0.0781||-||0.327 * 0.7421|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $29.6 Mil.|
Revenue was 36.775 + 37.439 + 34.742 + 40.422 = $149.4 Mil.
Gross Profit was 14.773 + 14.692 + 12.656 + 17.437 = $59.6 Mil.
Total Current Assets was $118.8 Mil.
Total Assets was $255.4 Mil.
Property, Plant and Equipment(Net PPE) was $20.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.4 Mil.
Selling, General & Admin. Expense(SGA) was $39.2 Mil.
Total Current Liabilities was $36.1 Mil.
Long-Term Debt was $1.3 Mil.
Net Income was -2.182 + -7.137 + -4.197 + -2.51 = $-16.0 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 2.821 + 1.081 + -1.539 + 1.562 = $3.9 Mil.
|Accounts Receivable was $27.5 Mil.
Revenue was 43.857 + 44.315 + 43.159 + 30.719 = $162.1 Mil.
Gross Profit was 17.948 + 16.89 + 4.132 + 10.956 = $49.9 Mil.
Total Current Assets was $118.2 Mil.
Total Assets was $283.1 Mil.
Property, Plant and Equipment(Net PPE) was $26.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.4 Mil.
Selling, General & Admin. Expense(SGA) was $43.5 Mil.
Total Current Liabilities was $50.8 Mil.
Long-Term Debt was $5.1 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)|
|=||(29.557 / 149.378)||/||(27.459 / 162.05)|
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)|
|=||(49.926 / 162.05)||/||(59.558 / 149.378)|
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 - (118.758 + 20.388) / 255.373)||/||(1 - (118.212 + 26.077) / 283.1)|
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))|
|=||(18.424 / (18.424 + 26.077))||/||(19.431 / (19.431 + 20.388))|
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)|
|=||(39.241 / 149.378)||/||(43.458 / 162.05)|
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)|
|=||((1.285 + 36.117) / 255.373)||/||((5.069 + 50.806) / 283.1)|
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|
|=||(-16.026 - 0||-||3.925)||/||255.373|
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 -2.84 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
Exar Corp Annual Data
Exar Corp Quarterly Data