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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 -1.40. The lowest was -3.05. 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 * 1.024||+||0.528 * 1.0159||+||0.404 * 1.0457||+||0.892 * 1.1683||+||0.115 * 0.91|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9587||+||4.679 * -0.0417||-||0.327 * 0.8729|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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 $42.2 Mil.
Selling, General & Admin. Expense(SGA) was $139.3 Mil.
Total Current Liabilities was $125.9 Mil.
Long-Term Debt was $192.5 Mil.
Net Income was 22.096 + 12.302 + 12.655 + 8.531 = $55.6 Mil.
Non Operating Income was 9.295 + -1.682 + 0.868 + 1.694 = $10.2 Mil.
Cash Flow from Operations was 48.588 + 0.856 + 26.857 + 12.731 = $89.0 Mil.
|Accounts Receivable was $113.2 Mil.
Revenue was 171.765 + 150.02 + 154.03 + 143.94 = $619.8 Mil.
Gross Profit was 53.394 + 56.311 + 54.896 + 50.954 = $215.6 Mil.
Total Current Assets was $533.5 Mil.
Total Assets was $1,116.2 Mil.
Property, Plant and Equipment(Net PPE) was $225.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.2 Mil.
Selling, General & Admin. Expense(SGA) was $124.4 Mil.
Total Current Liabilities was $126.3 Mil.
Long-Term Debt was $262.9 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)|
|=||(135.403 / 724.045)||/||(113.182 / 619.755)|
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)|
|=||(67.859 / 619.755)||/||(63.018 / 724.045)|
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 - (489.725 + 206.482) / 1046.117)||/||(1 - (533.539 + 225.592) / 1116.161)|
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))|
|=||(41.201 / (41.201 + 225.592))||/||(42.204 / (42.204 + 206.482))|
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)|
|=||(139.305 / 724.045)||/||(124.371 / 619.755)|
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)|
|=||((192.512 + 125.876) / 1046.117)||/||((262.858 + 126.325) / 1116.161)|
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|
|=||(55.584 - 10.175||-||89.032)||/||1046.117|
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 -2.44 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