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Beneish M-Score -0.62 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 Corp has a M-score of -0.62 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Exar Corp was 4.06. The lowest was -5.13. And the median was -2.65.
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 * 1.5562||+||0.528 * 1.2436||+||0.404 * 4.9241||+||0.892 * 0.9841||+||0.115 * 1.3163|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1183||+||4.679 * 0.0038||-||0.327 * 2.177|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $29.1 Mil.|
Revenue was 30.719 + 27.987 + 30.69 + 34.018 = $123.4 Mil.
Gross Profit was 10.956 + 8.422 + 12.826 + 13.929 = $46.1 Mil.
Total Current Assets was $216.0 Mil.
Total Assets was $392.1 Mil.
Property, Plant and Equipment(Net PPE) was $20.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $35.3 Mil.
Total Current Liabilities was $117.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -12.105 + 0.147 + -1.634 + 6.482 = $-7.1 Mil.
Non Operating Income was 0 + -0.323 + 0 + 0 = $-0.3 Mil.
Cash Flow from Operations was -8.137 + 1.708 + -5.409 + 3.569 = $-8.3 Mil.
|Accounts Receivable was $19.0 Mil.
Revenue was 32.627 + 31.154 + 30.999 + 30.622 = $125.4 Mil.
Gross Profit was 15.477 + 15.296 + 14.192 + 13.33 = $58.3 Mil.
Total Current Assets was $260.1 Mil.
Total Assets was $293.7 Mil.
Property, Plant and Equipment(Net PPE) was $9.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.6 Mil.
Selling, General & Admin. Expense(SGA) was $32.1 Mil.
Total Current Liabilities was $39.3 Mil.
Long-Term Debt was $1.0 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)|
|=||(29.12 / 123.414)||/||(19.014 / 125.402)|
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)|
|=||(8.422 / 125.402)||/||(10.956 / 123.414)|
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 - (215.986 + 20.644) / 392.136)||/||(1 - (260.132 + 9.87) / 293.651)|
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))|
|=||(10.617 / (10.617 + 9.87))||/||(13.406 / (13.406 + 20.644))|
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)|
|=||(35.331 / 123.414)||/||(32.103 / 125.402)|
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)|
|=||((0.04 + 117.11) / 392.136)||/||((1.012 + 39.285) / 293.651)|
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|
|=||(-7.11 - -0.323||-||-8.269)||/||392.136|
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 -0.62 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