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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 F5 Networks Inc was -0.46. The lowest was -4.04. And the median was -2.83.
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 F5 Networks Inc 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 * 0.9476||+||0.528 * 0.997||+||0.404 * 0.818||+||0.892 * 1.1334||+||0.115 * 1.0894|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9877||+||4.679 * -0.1405||-||0.327 * 1.1287|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $261 Mil.|
Revenue was 483.586 + 472.143 + 462.793 + 465.266 = $1,884 Mil.
Gross Profit was 397.927 + 389.547 + 383.445 + 383.314 = $1,554 Mil.
Total Current Assets was $1,186 Mil.
Total Assets was $2,262 Mil.
Property, Plant and Equipment(Net PPE) was $84 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $717 Mil.
Total Current Liabilities was $717 Mil.
Long-Term Debt was $0 Mil.
Net Income was 93.172 + 85.729 + 89.076 + 94.021 = $362 Mil.
Non Operating Income was 0.72 + 3.266 + 2.594 + 2.323 = $9 Mil.
Cash Flow from Operations was 172.507 + 142.296 + 186.395 + 169.865 = $671 Mil.
|Accounts Receivable was $243 Mil.
Revenue was 440.285 + 420.043 + 406.452 + 395.329 = $1,662 Mil.
Gross Profit was 360.823 + 344.381 + 333.569 + 328.386 = $1,367 Mil.
Total Current Assets was $945 Mil.
Total Assets was $2,175 Mil.
Property, Plant and Equipment(Net PPE) was $63 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $641 Mil.
Total Current Liabilities was $611 Mil.
Long-Term Debt was $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)|
|=||(261.068 / 1883.788)||/||(243.072 / 1662.109)|
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)|
|=||(389.547 / 1662.109)||/||(397.927 / 1883.788)|
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 - (1185.508 + 83.507) / 2262.351)||/||(1 - (945.123 + 62.65) / 2175.485)|
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))|
|=||(44.355 / (44.355 + 62.65))||/||(51.291 / (51.291 + 83.507))|
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)|
|=||(717.133 / 1883.788)||/||(640.654 / 1662.109)|
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 + 717.447) / 2262.351)||/||((0 + 611.22) / 2175.485)|
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|
|=||(361.998 - 8.903||-||671.063)||/||2262.351|
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.
F5 Networks Inc has a M-score of -3.17 suggests that the company will not 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
F5 Networks Inc Annual Data
F5 Networks Inc Quarterly Data