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Fabrinet (NYSE:FN)
Beneish M-Score
-2.22 (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 -2.22 suggests that the company is not a manipulator.

FN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.2   Max: -1.85
Current: -2.22

-3.2
-1.85

During the past 11 years, the highest Beneish M-Score of Fabrinet was -1.85. The lowest was -3.20. And the median was -2.24.


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 * 1.1511+0.528 * 0.9272+0.404 * 0.7753+0.892 * 1.2626+0.115 * 0.9507
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9702+4.679 * 0.0191-0.327 * 1.2375
=-2.22

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $196.1 Mil.
Revenue was 276.388 + 250.888 + 233.038 + 216.433 = $976.7 Mil.
Gross Profit was 33.842 + 31.177 + 28.493 + 26.011 = $119.5 Mil.
Total Current Assets was $673.3 Mil.
Total Assets was $856.5 Mil.
Property, Plant and Equipment(Net PPE) was $178.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.4 Mil.
Selling, General & Admin. Expense(SGA) was $49.8 Mil.
Total Current Liabilities was $256.0 Mil.
Long-Term Debt was $36.4 Mil.
Net Income was 19.669 + 20.822 + 19.803 + 1.603 = $61.9 Mil.
Non Operating Income was -0.56 + 3.137 + 6.272 + -10.389 = $-1.5 Mil.
Cash Flow from Operations was 5.732 + 17.652 + 19.165 + 4.539 = $47.1 Mil.
Accounts Receivable was $135.0 Mil.
Revenue was 206.456 + 189.453 + 188.353 + 189.325 = $773.6 Mil.
Gross Profit was 24.549 + 21.657 + 21.061 + 20.506 = $87.8 Mil.
Total Current Assets was $527.0 Mil.
Total Assets was $672.5 Mil.
Property, Plant and Equipment(Net PPE) was $140.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.9 Mil.
Selling, General & Admin. Expense(SGA) was $40.6 Mil.
Total Current Liabilities was $181.0 Mil.
Long-Term Debt was $4.5 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)
=(196.145 / 976.747) / (134.952 / 773.587)
=0.20081454 / 0.17444967
=1.1511

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)
=(87.773 / 773.587) / (119.523 / 976.747)
=0.11346235 / 0.12236843
=0.9272

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 - (673.291 + 178.41) / 856.45) / (1 - (527.039 + 140.654) / 672.503)
=0.00554498 / 0.00715238
=0.7753

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
=976.747 / 773.587
=1.2626

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))
=(12.947 / (12.947 + 140.654)) / (17.357 / (17.357 + 178.41))
=0.08428982 / 0.08866152
=0.9507

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)
=(49.753 / 976.747) / (40.613 / 773.587)
=0.05093745 / 0.05249959
=0.9702

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)
=((36.4 + 256.018) / 856.45) / ((4.5 + 181.048) / 672.503)
=0.34143032 / 0.27590658
=1.2375

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
=(61.897 - -1.54 - 47.088) / 856.45
=0.0191

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 -2.22 suggests that the company will not 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 own 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.88810.80820.80680.80660.94411.16891.12451.18181.14981.1511
GMI 0.99740.98810.98251.00280.97410.96520.9390.91180.91630.9272
AQI 0.80840.97561.15631.13351.22841.42381.48631.00720.84450.7753
SGI 1.08541.05661.06291.05981.07311.14121.1511.19841.2471.2626
DEPI 0.99280.96240.93590.9671.12671.17181.13461.11570.90050.9507
SGAI 1.03041.01331.04781.16291.20241.28641.28021.12091.06660.9702
LVGI 0.73790.81450.85660.90321.03321.18791.17571.20321.1071.2375
TATA 0.07110.04320.03360.0289-0.0116-0.01310.0050.00520.00350.0191
M-score -2.17-2.37-2.36-2.41-2.47-2.20-2.13-2.23-2.27-2.22
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