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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 -3.06. And the median was -2.54.
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 * 0.9024||+||0.528 * 0.9186||+||0.404 * 0.995||+||0.892 * 1.0497||+||0.115 * 0.9761|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0128||+||4.679 * -0.0719||-||0.327 * 0.8105|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $128.3 Mil.|
Revenue was 191.434 + 189.207 + 196.683 + 182.709 = $760.0 Mil.
Gross Profit was 71.344 + 71.189 + 74.996 + 65.725 = $283.3 Mil.
Total Current Assets was $495.6 Mil.
Total Assets was $1,043.4 Mil.
Property, Plant and Equipment(Net PPE) was $200.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.6 Mil.
Selling, General & Admin. Expense(SGA) was $148.1 Mil.
Total Current Liabilities was $130.9 Mil.
Long-Term Debt was $126.5 Mil.
Net Income was 18.991 + 17.214 + 17.069 + 14.508 = $67.8 Mil.
Non Operating Income was 0.994 + 1.057 + 0.097 + -1.534 = $0.6 Mil.
Cash Flow from Operations was 40.121 + 22.179 + 43.663 + 36.259 = $142.2 Mil.
|Accounts Receivable was $135.4 Mil.
Revenue was 176.736 + 185.833 + 187.921 + 173.555 = $724.0 Mil.
Gross Profit was 63.018 + 67.859 + 62.321 + 54.69 = $247.9 Mil.
Total Current Assets was $489.7 Mil.
Total Assets was $1,046.1 Mil.
Property, Plant and Equipment(Net PPE) was $206.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.5 Mil.
Selling, General & Admin. Expense(SGA) was $139.3 Mil.
Total Current Liabilities was $125.9 Mil.
Long-Term Debt was $192.5 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)|
|=||(128.26 / 760.033)||/||(135.403 / 724.045)|
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)|
|=||(71.189 / 724.045)||/||(71.344 / 760.033)|
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 - (495.626 + 200.563) / 1043.445)||/||(1 - (489.725 + 206.482) / 1046.117)|
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))|
|=||(53.497 / (53.497 + 206.482))||/||(53.575 / (53.575 + 200.563))|
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)|
|=||(148.095 / 760.033)||/||(139.305 / 724.045)|
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)|
|=||((126.491 + 130.893) / 1043.445)||/||((192.512 + 125.876) / 1046.117)|
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|
|=||(67.782 - 0.614||-||142.222)||/||1043.445|
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 -2.85 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