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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 -3.88. And the median was -2.87.
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 * 1.0145||+||0.528 * 1.0099||+||0.404 * 0.846||+||0.892 * 1.1693||+||0.115 * 0.946|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9711||+||4.679 * -0.1106||-||0.327 * 1.1794|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $242 Mil.|
Revenue was 465.266 + 440.285 + 420.043 + 406.452 = $1,732 Mil.
Gross Profit was 383.314 + 360.823 + 344.381 + 333.569 = $1,422 Mil.
Total Current Assets was $999 Mil.
Total Assets was $2,185 Mil.
Property, Plant and Equipment(Net PPE) was $67 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $665 Mil.
Total Current Liabilities was $637 Mil.
Long-Term Debt was $0 Mil.
Net Income was 94.021 + 79.473 + 69.641 + 68.048 = $311 Mil.
Non Operating Income was 2.323 + 1.193 + 0.023 + 0.246 = $4 Mil.
Cash Flow from Operations was 169.865 + 138.234 + 81.967 + 158.926 = $549 Mil.
|Accounts Receivable was $204 Mil.
Revenue was 395.329 + 370.302 + 350.232 + 365.451 = $1,481 Mil.
Gross Profit was 328.386 + 305.385 + 289.93 + 304.566 = $1,228 Mil.
Total Current Assets was $816 Mil.
Total Assets was $2,231 Mil.
Property, Plant and Equipment(Net PPE) was $64 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $585 Mil.
Total Current Liabilities was $551 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)|
|=||(242.242 / 1732.046)||/||(204.205 / 1481.314)|
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)|
|=||(360.823 / 1481.314)||/||(383.314 / 1732.046)|
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 - (998.848 + 66.791) / 2184.95)||/||(1 - (816.371 + 63.522) / 2230.554)|
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))|
|=||(40.005 / (40.005 + 63.522))||/||(46.121 / (46.121 + 66.791))|
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)|
|=||(664.738 / 1732.046)||/||(585.442 / 1481.314)|
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 + 636.981) / 2184.95)||/||((0 + 551.35) / 2230.554)|
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|
|=||(311.183 - 3.785||-||548.992)||/||2184.95|
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 -2.95 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