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Exar Corporation (NYSE:EXAR)
Beneish M-Score
-0.53 (As of Today)

Warning Sign:

Beneish M-Score -0.53 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 Corporation has a M-score of -0.53 signals that the company is a manipulator.

EXAR' s 10-Year Beneish M-Score Range
Min: -4.28   Max: 4.06
Current: -0.53

-4.28
4.06

During the past 13 years, the highest Beneish M-Score of Exar Corporation was 4.06. The lowest was -4.28. And the median was -2.66.


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 Corporation 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 * 1.4358+0.528 * 0.9298+0.404 * 4.6118+0.892 * 1.0828+0.115 * 0.6212
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9546+4.679 * 0.0145-0.327 * 0.9342
=-0.53

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $23.4 Mil.
Revenue was 30.69 + 34.018 + 32.627 + 31.154 = $128.5 Mil.
Gross Profit was 12.826 + 13.929 + 15.477 + 15.296 = $57.5 Mil.
Total Current Assets was $240.8 Mil.
Total Assets was $308.7 Mil.
Property, Plant and Equipment(Net PPE) was $8.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.9 Mil.
Selling, General & Admin. Expense(SGA) was $35.0 Mil.
Total Current Liabilities was $40.2 Mil.
Long-Term Debt was $0.1 Mil.
Net Income was -1.634 + 6.482 + 0.806 + 1.672 = $7.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was -5.409 + 3.569 + 0.983 + 3.712 = $2.9 Mil.
Accounts Receivable was $15.0 Mil.
Revenue was 30.999 + 30.622 + 29.251 + 27.789 = $118.7 Mil.
Gross Profit was 14.192 + 13.33 + 12.869 + 9.009 = $49.4 Mil.
Total Current Assets was $238.7 Mil.
Total Assets was $273.8 Mil.
Property, Plant and Equipment(Net PPE) was $23.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.2 Mil.
Selling, General & Admin. Expense(SGA) was $33.8 Mil.
Total Current Liabilities was $36.7 Mil.
Long-Term Debt was $1.6 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)
=(23.384 / 128.489) / (15.041 / 118.661)
=0.18199223 / 0.12675605
=1.4358

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)
=(13.929 / 118.661) / (12.826 / 128.489)
=0.41631201 / 0.44772704
=0.9298

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 - (240.834 + 8.784) / 308.696) / (1 - (238.714 + 23.743) / 273.82)
=0.19137922 / 0.04149806
=4.6118

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
=128.489 / 118.661
=1.0828

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))
=(13.177 / (13.177 + 23.743)) / (11.862 / (11.862 + 8.784))
=0.35690683 / 0.57454228
=0.6212

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)
=(34.979 / 128.489) / (33.84 / 118.661)
=0.27223342 / 0.28518216
=0.9546

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)
=((0.106 + 40.205) / 308.696) / ((1.598 + 36.678) / 273.82)
=0.13058478 / 0.13978526
=0.9342

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
=(7.326 - 0 - 2.855) / 308.696
=0.0145

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 Corporation has a M-score of -0.53 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 Corporation Annual Data

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
DSRI 1.6790.63452.64050.78321.39090.41091.64130.67370.98051.5043
GMI 0.83970.95851.0060.99881.51981.02410.92881.07211.02330.9386
AQI 0.18821.12661.91290.97353.12260.15134.41490.57310.77421.5966
SGI 1.00280.85381.16831.02211.31011.28281.17161.08250.89430.9346
DEPI 0.940.8910.94930.99980.79840.84720.77610.9660.96881.1271
SGAI 1.03221.24780.88211.14541.16060.80141.07030.85580.95350.9048
LVGI 1.21110.83031.31210.98472.44611.54921.29791.00510.92910.9126
TATA -0.0044-0.0142-0.0087-0.0324-0.1035-0.2215-0.0943-0.1095-0.0947-0.0153
M-score -2.37-2.98-0.58-2.84-1.72-4.30-0.97-3.33-3.09-1.88

Exar Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.88381.00380.98050.99111.35211.47171.50431.2731.11361.4358
GMI 1.12471.10451.02331.0231.04431.0330.93860.90980.90490.9298
AQI 0.66090.60180.77420.77330.65490.65121.59661.57194.33184.6118
SGI 0.95270.90590.89430.85690.8250.8690.93461.02091.09761.0828
DEPI 0.82421.01990.96881.16151.14360.91911.12710.68880.64020.6212
SGAI 0.90780.95350.95351.02711.060.97960.90480.86840.89640.9546
LVGI 0.75220.86140.92911.03881.07990.95630.91260.96360.96090.9342
TATA -0.0996-0.1029-0.0947-0.0765-0.0676-0.0658-0.0153-0.0216-0.00450.0145
M-score -3.09-3.09-3.09-3.05-2.76-2.59-1.88-2.13-1.02-0.53
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