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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.
F5 Networks Inc has a M-score of -2.90 suggests that the company is not a 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 -2.77.
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 * 1.0327||+||0.528 * 1.0069||+||0.404 * 0.9224||+||0.892 * 1.1474||+||0.115 * 0.9283|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9636||+||4.679 * -0.1084||-||0.327 * 1.1387|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was 79.473 + 69.641 + 68.048 + 76.231 = $293 Mil.
Non Operating Income was 1.193 + 0.023 + 0.246 + 0.732 = $2 Mil.
Cash Flow from Operations was 138.234 + 81.967 + 158.926 + 147.995 = $527 Mil.
|Accounts Receivable was $205 Mil.
Revenue was 370.302 + 350.232 + 365.451 + 362.559 = $1,449 Mil.
Gross Profit was 305.385 + 289.93 + 304.566 + 299.878 = $1,200 Mil.
Total Current Assets was $834 Mil.
Total Assets was $2,148 Mil.
Property, Plant and Equipment(Net PPE) was $64 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $579 Mil.
Total Current Liabilities was $530 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)|
|=||(243.072 / 1662.109)||/||(205.138 / 1448.544)|
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)|
|=||(344.381 / 1448.544)||/||(360.823 / 1662.109)|
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 - (945.123 + 62.65) / 2175.485)||/||(1 - (834.309 + 63.72) / 2147.803)|
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))|
|=||(39.857 / (39.857 + 63.72))||/||(44.355 / (44.355 + 62.65))|
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)|
|=||(640.654 / 1662.109)||/||(579.407 / 1448.544)|
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 + 611.22) / 2175.485)||/||((0 + 529.948) / 2147.803)|
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|
|=||(293.393 - 2.194||-||527.122)||/||2175.485|
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 -2.90 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