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Fabrinet (NYSE:FN)
Beneish M-Score
-1.74 (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 -1.74 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: -1.74

-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 * 1.1158+0.528 * 0.9559+0.404 * 1.5059+0.892 * 1.3643+0.115 * 1.0857
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8989+4.679 * 0.0342-0.327 * 1.182
=-1.74

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $213 Mil.
Revenue was 332.043 + 276.388 + 250.888 + 233.038 = $1,092 Mil.
Gross Profit was 39.608 + 33.842 + 31.177 + 28.493 = $133 Mil.
Total Current Assets was $680 Mil.
Total Assets was $901 Mil.
Property, Plant and Equipment(Net PPE) was $206 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $54 Mil.
Total Current Liabilities was $269 Mil.
Long-Term Debt was $34 Mil.
Net Income was 22.766 + 19.669 + 20.822 + 19.803 = $83 Mil.
Non Operating Income was 1.8 + -0.56 + 3.137 + 6.272 = $11 Mil.
Cash Flow from Operations was -1.002 + 5.732 + 17.652 + 19.165 = $42 Mil.
Accounts Receivable was $140 Mil.
Revenue was 216.433 + 206.456 + 189.453 + 188.353 = $801 Mil.
Gross Profit was 26.011 + 24.549 + 21.657 + 21.061 = $93 Mil.
Total Current Assets was $536 Mil.
Total Assets was $688 Mil.
Property, Plant and Equipment(Net PPE) was $144 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $44 Mil.
Total Current Liabilities was $193 Mil.
Long-Term Debt was $3 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)
=(212.684 / 1092.357) / (139.715 / 800.695)
=0.19470192 / 0.17449216
=1.1158

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)
=(93.278 / 800.695) / (133.12 / 1092.357)
=0.11649629 / 0.12186492
=0.9559

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 - (680.451 + 205.845) / 901.303) / (1 - (536.443 + 144.148) / 688.2)
=0.01665034 / 0.01105638
=1.5059

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
=1092.357 / 800.695
=1.3643

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))
=(14.102 / (14.102 + 144.148)) / (18.407 / (18.407 + 205.845))
=0.08911216 / 0.08208177
=1.0857

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)
=(53.685 / 1092.357) / (43.776 / 800.695)
=0.04914602 / 0.0546725
=0.8989

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)
=((34.315 + 269.243) / 901.303) / ((3 + 193.102) / 688.2)
=0.33679906 / 0.28494914
=1.182

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
=(83.06 - 10.649 - 41.547) / 901.303
=0.0342

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 -1.74 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 1.43850.91150.71731.17240.56011.13860.73531.42380.7753
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 0.90990.77641.18920.80341.49690.65270.80181.18791.2375
TATA -0.0323-0.17150.06990.0554-0.13150.04120.0432-0.01310.0191
M-score -2.15-3.62-1.76-1.85-3.20-2.15-2.46-2.20-2.22

Fabrinet Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.80820.80680.80660.94411.16891.12451.18181.14981.15111.1158
GMI 0.98810.98251.00280.97410.96520.9390.91180.91630.92720.9559
AQI 0.73531.15631.13351.22841.42381.48631.00720.84450.77531.5059
SGI 1.05661.06291.05981.07311.14121.1511.19841.2471.26261.3643
DEPI 0.96240.93590.9671.12671.17181.13461.11570.90050.95071.0857
SGAI 1.01331.04781.16291.20241.28641.28021.12091.06660.97020.8989
LVGI 0.80180.85660.90321.03321.18791.17571.20321.1071.23751.182
TATA 0.04320.03360.0289-0.0116-0.01310.0050.00520.00350.01910.0342
M-score -2.46-2.36-2.41-2.47-2.20-2.13-2.23-2.27-2.22-1.74
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