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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 -2.57.
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 * 1.0102||+||0.528 * 0.9524||+||0.404 * 0.8777||+||0.892 * 1.184||+||0.115 * 1.295|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9837||+||4.679 * -0.0437||-||0.327 * 1.3405|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $153.4 Mil.|
Revenue was 231.822 + 221.52 + 241.47 + 205.105 = $899.9 Mil.
Gross Profit was 94.263 + 87.602 + 92.611 + 77.669 = $352.1 Mil.
Total Current Assets was $610.1 Mil.
Total Assets was $1,293.0 Mil.
Property, Plant and Equipment(Net PPE) was $305.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.3 Mil.
Selling, General & Admin. Expense(SGA) was $172.5 Mil.
Total Current Liabilities was $160.7 Mil.
Long-Term Debt was $266.9 Mil.
Net Income was 23.903 + 16.294 + 14.343 + 14.938 = $69.5 Mil.
Non Operating Income was 6.045 + 1.402 + 0.429 + -1.257 = $6.6 Mil.
Cash Flow from Operations was 39.179 + 19.513 + 41.734 + 18.936 = $119.4 Mil.
|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.
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)|
|=||(153.411 / 899.917)||/||(128.26 / 760.033)|
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)|
|=||(283.254 / 760.033)||/||(352.145 / 899.917)|
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 - (610.147 + 305.174) / 1293.001)||/||(1 - (495.626 + 200.563) / 1043.445)|
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))|
|=||(53.575 / (53.575 + 200.563))||/||(59.337 / (59.337 + 305.174))|
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)|
|=||(172.502 / 899.917)||/||(148.095 / 760.033)|
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)|
|=||((266.856 + 160.698) / 1293.001)||/||((126.491 + 130.893) / 1043.445)|
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|
|=||(69.478 - 6.619||-||119.362)||/||1293.001|
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 -2.66 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