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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.
During the past 13 years, the highest Beneish M-Score of II-VI Inc was -1.41. The lowest was -3.05. And the median was -2.56.
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 II-VI 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 * 1.0145||+||0.528 * 0.963||+||0.404 * 0.9598||+||0.892 * 1.1532||+||0.115 * 1.1405|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9998||+||4.679 * -0.0466||-||0.327 * 1.2043|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $156.0 Mil.|
Revenue was 221.52 + 241.47 + 205.105 + 191.434 = $859.5 Mil.
Gross Profit was 87.602 + 92.611 + 77.669 + 71.344 = $329.2 Mil.
Total Current Assets was $584.6 Mil.
Total Assets was $1,228.5 Mil.
Property, Plant and Equipment(Net PPE) was $260.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.2 Mil.
Selling, General & Admin. Expense(SGA) was $166.4 Mil.
Total Current Liabilities was $154.2 Mil.
Long-Term Debt was $228.2 Mil.
Net Income was 16.294 + 14.343 + 14.938 + 18.991 = $64.6 Mil.
Non Operating Income was 1.402 + 0.429 + -1.257 + 0.994 = $1.6 Mil.
Cash Flow from Operations was 19.513 + 41.734 + 18.936 + 40.121 = $120.3 Mil.
|Accounts Receivable was $133.3 Mil.
Revenue was 189.207 + 196.683 + 182.709 + 176.736 = $745.3 Mil.
Gross Profit was 71.189 + 74.996 + 65.725 + 63.018 = $274.9 Mil.
Total Current Assets was $497.2 Mil.
Total Assets was $1,034.0 Mil.
Property, Plant and Equipment(Net PPE) was $201.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.8 Mil.
Selling, General & Admin. Expense(SGA) was $144.3 Mil.
Total Current Liabilities was $124.8 Mil.
Long-Term Debt was $142.5 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)|
|=||(155.954 / 859.529)||/||(133.305 / 745.335)|
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)|
|=||(274.928 / 745.335)||/||(329.226 / 859.529)|
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 - (584.564 + 260.912) / 1228.487)||/||(1 - (497.153 + 201.001) / 1034.026)|
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))|
|=||(52.827 / (52.827 + 201.001))||/||(58.24 / (58.24 + 260.912))|
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)|
|=||(166.415 / 859.529)||/||(144.329 / 745.335)|
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)|
|=||((228.206 + 154.226) / 1228.487)||/||((142.493 + 124.798) / 1034.026)|
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|
|=||(64.566 - 1.568||-||120.304)||/||1228.487|
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.
II-VI Inc has a M-score of -2.63 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
II-VI Inc Annual Data
II-VI Inc Quarterly Data