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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 -2.92 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 * 1.0417||+||0.528 * 1.0067||+||0.404 * 0.9186||+||0.892 * 1.1127||+||0.115 * 0.9478|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9821||+||4.679 * -0.1094||-||0.327 * 1.0949|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $223 Mil.|
Revenue was 420.043 + 406.452 + 395.329 + 370.302 = $1,592 Mil.
Gross Profit was 344.381 + 333.569 + 328.386 + 305.385 = $1,312 Mil.
Total Current Assets was $950 Mil.
Total Assets was $2,166 Mil.
Property, Plant and Equipment(Net PPE) was $62 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $620 Mil.
Total Current Liabilities was $598 Mil.
Long-Term Debt was $0 Mil.
Net Income was 69.641 + 68.048 + 76.231 + 68.178 = $282 Mil.
Non Operating Income was 0.023 + 0.246 + 0.732 + 2.874 = $4 Mil.
Cash Flow from Operations was 81.967 + 158.926 + 147.995 + 126.23 = $515 Mil.
|Accounts Receivable was $193 Mil.
Revenue was 350.232 + 365.451 + 362.559 + 352.634 = $1,431 Mil.
Gross Profit was 289.93 + 304.566 + 299.878 + 292.347 = $1,187 Mil.
Total Current Assets was $804 Mil.
Total Assets was $2,066 Mil.
Property, Plant and Equipment(Net PPE) was $63 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $568 Mil.
Total Current Liabilities was $521 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)|
|=||(223.472 / 1592.126)||/||(192.796 / 1430.876)|
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)|
|=||(333.569 / 1430.876)||/||(344.381 / 1592.126)|
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 - (950.419 + 61.608) / 2166.2)||/||(1 - (804.424 + 63.182) / 2065.909)|
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))|
|=||(40.117 / (40.117 + 63.182))||/||(42.77 / (42.77 + 61.608))|
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)|
|=||(620.169 / 1592.126)||/||(567.536 / 1430.876)|
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 + 597.843) / 2166.2)||/||((0 + 520.744) / 2065.909)|
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|
|=||(282.098 - 3.875||-||515.118)||/||2166.2|
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 -2.92 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