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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 4.06. The lowest was -6.47. And the median was -2.70.
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 * 0.7161||+||0.528 * 0.7973||+||0.404 * 0.3333||+||0.892 * 0.8532||+||0.115 * 0.5271|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0046||+||4.679 * -0.0411||-||0.327 * 0.7463|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $15.5 Mil.|
Revenue was 27.136 + 36.775 + 37.439 + 34.742 = $136.1 Mil.
Gross Profit was 13.362 + 14.773 + 14.692 + 12.656 = $55.5 Mil.
Total Current Assets was $221.0 Mil.
Total Assets was $269.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.2 Mil.
Selling, General & Admin. Expense(SGA) was $35.5 Mil.
Total Current Liabilities was $37.5 Mil.
Long-Term Debt was $0.9 Mil.
Net Income was 8.94 + -2.182 + -7.137 + -4.197 = $-4.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 4.144 + 2.821 + 1.081 + -1.539 = $6.5 Mil.
|Accounts Receivable was $25.4 Mil.
Revenue was 28.183 + 43.857 + 44.315 + 43.159 = $159.5 Mil.
Gross Profit was 12.878 + 17.948 + 16.89 + 4.132 = $51.8 Mil.
Total Current Assets was $119.0 Mil.
Total Assets was $279.1 Mil.
Property, Plant and Equipment(Net PPE) was $24.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.5 Mil.
Selling, General & Admin. Expense(SGA) was $41.4 Mil.
Total Current Liabilities was $48.5 Mil.
Long-Term Debt was $4.6 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)|
|=||(15.539 / 136.092)||/||(25.434 / 159.514)|
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)|
|=||(51.848 / 159.514)||/||(55.483 / 136.092)|
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 - (220.97 + 5.159) / 269.76)||/||(1 - (119.041 + 24.637) / 279.102)|
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))|
|=||(17.496 / (17.496 + 24.637))||/||(19.154 / (19.154 + 5.159))|
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)|
|=||(35.506 / 136.092)||/||(41.427 / 159.514)|
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)|
|=||((0.856 + 37.461) / 269.76)||/||((4.629 + 48.49) / 279.102)|
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|
|=||(-4.576 - 0||-||6.507)||/||269.76|
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 -3.41 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