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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.
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.
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|
|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
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)|
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)|
|=||(13.929 / 118.661)||/||(12.826 / 128.489)|
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 - (240.834 + 8.784) / 308.696)||/||(1 - (238.714 + 23.743) / 273.82)|
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))|
|=||(13.177 / (13.177 + 23.743))||/||(11.862 / (11.862 + 8.784))|
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)|
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)|
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|
|=||(7.326 - 0||-||2.855)||/||308.696|
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.
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 Corporation Annual Data
Exar Corporation Quarterly Data