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Fabrinet (NYSE:FN)
Beneish M-Score
-1.40 (As of Today)

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.

Fabrinet has a M-score of -1.40 signals that the company is a manipulator.

FN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: -1.19
Current: -1.4

-3.43
-1.19

During the past 11 years, the highest Beneish M-Score of Fabrinet was -1.19. The lowest was -3.43. And the median was -2.27.


Definition

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 Fabrinet 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 * 1.1411+0.528 * 0.9765+0.404 * 2.0096+0.892 * 1.4319+0.115 * 1.0325
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8744+4.679 * 0.0412-0.327 * 1.1496
=-1.40

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $241 Mil.
Revenue was 351.156 + 332.043 + 276.388 + 250.888 = $1,210 Mil.
Gross Profit was 43.046 + 39.608 + 33.842 + 31.177 = $148 Mil.
Total Current Assets was $718 Mil.
Total Assets was $946 Mil.
Property, Plant and Equipment(Net PPE) was $214 Mil.
Depreciation, Depletion and Amortization(DDA) was $20 Mil.
Selling, General & Admin. Expense(SGA) was $58 Mil.
Total Current Liabilities was $283 Mil.
Long-Term Debt was $31 Mil.
Net Income was 25.292 + 22.766 + 19.669 + 20.822 = $89 Mil.
Non Operating Income was 2.092 + 1.8 + -0.56 + 3.137 = $6 Mil.
Cash Flow from Operations was 20.754 + -1.002 + 5.732 + 17.652 = $43 Mil.
Accounts Receivable was $147 Mil.
Revenue was 233.038 + 216.433 + 206.456 + 189.453 = $845 Mil.
Gross Profit was 28.493 + 26.011 + 24.549 + 21.657 = $101 Mil.
Total Current Assets was $559 Mil.
Total Assets was $724 Mil.
Property, Plant and Equipment(Net PPE) was $159 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $46 Mil.
Total Current Liabilities was $207 Mil.
Long-Term Debt was $2 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(240.887 / 1210.475) / (147.43 / 845.38)
=0.19900204 / 0.17439495
=1.1411

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(100.71 / 845.38) / (147.673 / 1210.475)
=0.11912986 / 0.12199591
=0.9765

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (718.4 + 213.987) / 945.919) / (1 - (559.02 + 159.415) / 723.586)
=0.01430566 / 0.00711871
=2.0096

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1210.475 / 845.38
=1.4319

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))
=(15.292 / (15.292 + 159.415)) / (19.821 / (19.821 + 213.987))
=0.08752941 / 0.08477469
=1.0325

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)
=(57.621 / 1210.475) / (46.024 / 845.38)
=0.04760197 / 0.05444179
=0.8744

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)
=((30.52 + 283.057) / 945.919) / ((1.5 + 207.153) / 723.586)
=0.33150513 / 0.28835964
=1.1496

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(88.549 - 6.469 - 43.136) / 945.919
=0.0412

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.

Fabrinet has a M-score of -1.40 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Fabrinet Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.22390.76911.38250.78861.43470.81320.80821.16891.1511
GMI 1.091.01581.03420.99851.16221.01320.98810.96520.9272
AQI 1.43850.91150.71731.17240.56010.85820.97561.42380.7753
SGI 1.03010.8631.14651.47030.75951.1361.05661.14121.2626
DEPI 1.21430.84121.08111.14691.20440.94930.96241.17180.9507
SGAI 1.17021.17040.64311.04191.35050.89391.01331.28640.9702
LVGI 0.90990.77641.18920.80341.49690.64260.81451.18791.2375
TATA -0.0323-0.17150.06990.0554-0.13150.04140.0432-0.01310.0191
M-score -2.15-3.62-1.76-1.85-3.20-2.26-2.37-2.20-2.22

Fabrinet Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.80680.80660.94411.16891.12451.18181.14981.15111.11581.1411
GMI 0.98251.00280.97410.96520.9390.91180.91630.92720.95590.9765
AQI 1.15631.13351.22841.42381.48631.00720.84450.77531.50592.0096
SGI 1.06291.05981.07311.14121.1511.19841.2471.26261.36431.4319
DEPI 0.93590.9671.12671.17181.13461.11570.90050.95071.08571.0325
SGAI 1.04781.16291.20241.28641.28021.12091.06660.97020.89890.8744
LVGI 0.85660.90321.03321.18791.17571.20321.1071.23751.1821.1496
TATA 0.03360.0289-0.0116-0.01310.0050.00520.00350.01910.03420.0412
M-score -2.36-2.41-2.47-2.20-2.13-2.23-2.27-2.22-1.74-1.40
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