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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.
II-VI Inc has a M-score of -2.48 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of II-VI Inc was -1.60. The lowest was -2.92. And the median was -2.50.
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 * 1.0352||+||0.528 * 1.0976||+||0.404 * 1.241||+||0.892 * 1.2324||+||0.115 * 0.9997|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0193||+||4.679 * -0.0566||-||0.327 * 1.3801|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $136.7 Mil.|
Revenue was 187.921 + 173.555 + 171.765 + 151.172 = $684.4 Mil.
Gross Profit was 62.321 + 54.69 + 53.394 + 56.346 = $226.8 Mil.
Total Current Assets was $505.7 Mil.
Total Assets was $1,071.9 Mil.
Property, Plant and Equipment(Net PPE) was $208.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.8 Mil.
Selling, General & Admin. Expense(SGA) was $137.7 Mil.
Total Current Liabilities was $135.1 Mil.
Long-Term Debt was $222.0 Mil.
Net Income was 12.655 + 8.531 + 7.569 + 9.694 = $38.4 Mil.
Non Operating Income was 0.868 + 1.694 + 1.125 + -0.067 = $3.6 Mil.
Cash Flow from Operations was 26.857 + 12.731 + 31.487 + 24.387 = $95.5 Mil.
|Accounts Receivable was $107.2 Mil.
Revenue was 154.03 + 143.94 + 125.107 + 132.292 = $555.4 Mil.
Gross Profit was 54.896 + 50.954 + 47.268 + 48.835 = $202.0 Mil.
Total Current Assets was $461.1 Mil.
Total Assets was $863.8 Mil.
Property, Plant and Equipment(Net PPE) was $170.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.1 Mil.
Selling, General & Admin. Expense(SGA) was $109.6 Mil.
Total Current Liabilities was $94.4 Mil.
Long-Term Debt was $114.0 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)|
|=||(136.723 / 684.413)||/||(107.173 / 555.369)|
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)|
|=||(54.69 / 555.369)||/||(62.321 / 684.413)|
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 - (505.731 + 208.939) / 1071.926)||/||(1 - (461.144 + 170.672) / 863.802)|
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))|
|=||(34.135 / (34.135 + 170.672))||/||(41.805 / (41.805 + 208.939))|
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)|
|=||(137.726 / 684.413)||/||(109.637 / 555.369)|
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)|
|=||((221.96 + 135.065) / 1071.926)||/||((114.036 + 94.434) / 863.802)|
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|
|=||(38.449 - 3.62||-||95.462)||/||1071.926|
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 -2.48 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