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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.
GigOptix, Inc. has a M-score of -2.94 suggests that the company is not a manipulator.
During the past 8 years, the highest Beneish M-Score of GigOptix, Inc. was -2.12. The lowest was -3.34. And the median was -3.06.
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 GigOptix, 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 * 1.2611||+||0.528 * 0.8955||+||0.404 * 0.7672||+||0.892 * 0.7874||+||0.115 * 0.8357|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0182||+||4.679 * -0.1174||-||0.327 * 0.3574|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $5.02 Mil.|
Revenue was 7.838 + 7.336 + 6.831 + 6.921 = $28.93 Mil.
Gross Profit was 4.515 + 4.351 + 4.253 + 4.285 = $17.40 Mil.
Total Current Assets was $30.45 Mil.
Total Assets was $47.06 Mil.
Property, Plant and Equipment(Net PPE) was $3.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.88 Mil.
Selling, General & Admin. Expense(SGA) was $9.39 Mil.
Total Current Liabilities was $4.75 Mil.
Long-Term Debt was $0.01 Mil.
Net Income was -1.522 + 3.532 + -1.388 + -2.568 = $-1.95 Mil.
Non Operating Income was -0.002 + 0.003 + 0.088 + 0.168 = $0.26 Mil.
Cash Flow from Operations was -0.91 + 6.087 + 0.252 + -2.108 = $3.32 Mil.
|Accounts Receivable was $5.06 Mil.
Revenue was 7.941 + 10.054 + 9.588 + 9.151 = $36.73 Mil.
Gross Profit was 4.568 + 5.201 + 5.051 + 4.973 = $19.79 Mil.
Total Current Assets was $19.61 Mil.
Total Assets was $38.83 Mil.
Property, Plant and Equipment(Net PPE) was $4.58 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.09 Mil.
Selling, General & Admin. Expense(SGA) was $11.71 Mil.
Total Current Liabilities was $10.70 Mil.
Long-Term Debt was $0.28 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)|
|=||(5.021 / 28.926)||/||(5.056 / 36.734)|
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)|
|=||(4.351 / 36.734)||/||(4.515 / 28.926)|
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 - (30.449 + 2.999) / 47.062)||/||(1 - (19.609 + 4.579) / 38.828)|
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))|
|=||(4.085 / (4.085 + 4.579))||/||(3.882 / (3.882 + 2.999))|
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)|
|=||(9.388 / 28.926)||/||(11.709 / 36.734)|
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)|
|=||((0.01 + 4.747) / 47.062)||/||((0.281 + 10.7) / 38.828)|
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|
|=||(-1.946 - 0.257||-||3.321)||/||47.062|
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.
GigOptix, Inc. has a M-score of -2.94 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
GigOptix, Inc. Annual Data
GigOptix, Inc. Quarterly Data