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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 -2.67.
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 * 1.4135||+||0.528 * 1.3119||+||0.404 * 2.3506||+||0.892 * 1.2931||+||0.115 * 0.9137|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0238||+||4.679 * -0.1087||-||0.327 * 1.4129|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|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 $43.8 Mil.
Total Current Liabilities was $50.8 Mil.
Long-Term Debt was $5.1 Mil.
Net Income was -2.914 + -6.599 + -23.352 + -12.105 = $-45.0 Mil.
Non Operating Income was -0.544 + 0 + 0 + 0 = $-0.5 Mil.
Cash Flow from Operations was 2.37 + -5.914 + -1.96 + -8.137 = $-13.6 Mil.
|Accounts Receivable was $15.0 Mil.
Revenue was 27.987 + 30.69 + 34.018 + 32.627 = $125.3 Mil.
Gross Profit was 8.422 + 12.826 + 13.929 + 15.477 = $50.7 Mil.
Total Current Assets was $217.9 Mil.
Total Assets was $302.2 Mil.
Property, Plant and Equipment(Net PPE) was $21.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.9 Mil.
Selling, General & Admin. Expense(SGA) was $33.1 Mil.
Total Current Liabilities was $42.1 Mil.
Long-Term Debt was $0.1 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)|
|=||(27.459 / 162.05)||/||(15.023 / 125.322)|
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)|
|=||(16.89 / 125.322)||/||(17.948 / 162.05)|
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 - (118.212 + 26.077) / 283.1)||/||(1 - (217.897 + 21.28) / 302.217)|
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))|
|=||(12.947 / (12.947 + 21.28))||/||(18.424 / (18.424 + 26.077))|
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)|
|=||(43.758 / 162.05)||/||(33.055 / 125.322)|
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)|
|=||((5.069 + 50.806) / 283.1)||/||((0.07 + 42.146) / 302.217)|
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|
|=||(-44.97 - -0.544||-||-13.641)||/||283.1|
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 -1.79 signals that the company is likely to 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