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GuruFocus has detected 4 Warning Signs with Exar Corp $EXAR.
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Exar Corp (NYSE:EXAR)
Beneish M-Score
-2.45 (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.

Exar Corp has a M-score of -2.45 suggests that the company is not a manipulator.

EXAR' s Beneish M-Score Range Over the Past 10 Years
Min: -17.53   Max: 4.06
Current: -2.45

-17.53
4.06

During the past 13 years, the highest Beneish M-Score of Exar Corp was 4.06. The lowest was -17.53. And the median was -2.71.


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 * 0.3673+0.528 * 0.9681+0.404 * 0.3107+0.892 * 1.2913+0.115 * 0.439
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9921+4.679 * 0.1222-0.327 * 0.5876
=-2.45

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $12.8 Mil.
Revenue was 27.222 + 27.601 + 27.136 + 73.13 = $155.1 Mil.
Gross Profit was 13.456 + 13.193 + 13.362 + 27.152 = $67.2 Mil.
Total Current Assets was $272.8 Mil.
Total Assets was $323.5 Mil.
Property, Plant and Equipment(Net PPE) was $3.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $41.0 Mil.
Total Current Liabilities was $28.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 45.379 + 1.008 + 8.94 + -2.182 = $53.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 1.109 + 5.536 + 4.144 + 2.821 = $13.6 Mil.
Accounts Receivable was $27.1 Mil.
Revenue was 25.31 + 22.755 + 28.183 + 43.857 = $120.1 Mil.
Gross Profit was 10.975 + 8.553 + 12.878 + 17.948 = $50.4 Mil.
Total Current Assets was $115.8 Mil.
Total Assets was $257.1 Mil.
Property, Plant and Equipment(Net PPE) was $21.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $32.0 Mil.
Total Current Liabilities was $36.5 Mil.
Long-Term Debt was $1.7 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)
=(12.842 / 155.089) / (27.079 / 120.105)
=0.08280407 / 0.22546105
=0.3673

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)
=(50.354 / 120.105) / (67.163 / 155.089)
=0.41924982 / 0.43306102
=0.9681

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 - (272.765 + 3.926) / 323.511) / (1 - (115.759 + 21.567) / 257.094)
=0.1447246 / 0.46585296
=0.3107

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
=155.089 / 120.105
=1.2913

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))
=(12.007 / (12.007 + 21.567)) / (17.262 / (17.262 + 3.926))
=0.35762793 / 0.81470644
=0.439

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)
=(40.97 / 155.089) / (31.981 / 120.105)
=0.2641709 / 0.26627534
=0.9921

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 + 28.243) / 323.511) / ((1.714 + 36.482) / 257.094)
=0.08730151 / 0.14856823
=0.5876

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
=(53.145 - 0 - 13.61) / 323.511
=0.1222

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 -2.45 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 local exchange's currency.

Exar Corp Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.5752.38730.5281.64130.67370.72891.59651.15971.41351.1677
GMI 0.99881.51981.02410.92881.07211.02330.93861.12911.31190.7727
AQI 0.97353.12260.15134.41490.57310.77421.59662.42982.35060.9282
SGI 1.02211.31011.28281.17161.08250.89430.93461.0271.29310.9218
DEPI 0.99980.79840.84720.77610.9660.96881.12710.81860.91370.8484
SGAI 1.14541.16060.80141.07030.85580.95350.90180.98941.02380.9727
LVGI 0.98472.44611.54921.29791.00510.92910.91260.98661.41290.7421
TATA -0.0324-0.4929-0.2215-0.0943-0.1095-0.0947-0.01530.0174-0.1087-0.0781
M-score -3.03-2.63-4.19-0.97-3.33-3.32-1.79-1.60-1.79-2.84

Exar Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.22661.07831.41350.73990.97871.14881.16770.6570.53730.3673
GMI 1.66811.621.31191.150.67770.65920.77270.8030.95790.9681
AQI 2.18922.56242.35061.22361.08470.950.92820.33330.33160.3107
SGI 1.02921.13771.29311.29251.04950.82160.92180.92991.10111.2913
DEPI 1.16141.27790.91370.94811.23871.25710.84840.52710.48450.439
SGAI 1.08251.05051.01670.90340.9350.95720.97940.98780.94860.9921
LVGI 2.1821.41721.41290.63710.57960.80280.74210.74630.75020.5876
TATA -0.0701-0.0983-0.1087-0.1107-0.0452-0.0766-0.0781-0.0411-0.04660.1222
M-score -2.12-1.90-1.78-2.68-2.63-2.96-2.84-3.39-3.29-2.45
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