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GuruFocus has detected 5 Warning Signs with II-VI Inc $IIVI.
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II-VI Inc (NAS:IIVI)
Beneish M-Score
-2.66 (As of Today)

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 -2.66 suggests that the company is not a manipulator.

IIVI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.06   Max: -1.41
Current: -2.66

-3.06
-1.41

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.


Definition

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
=-2.66

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.17047239 / 0.16875583
=1.0102

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(283.254 / 760.033) / (352.145 / 899.917)
=0.37268645 / 0.39130831
=0.9524

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.29209568 / 0.33279761
=0.8777

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=899.917 / 760.033
=1.184

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))
=0.21081066 / 0.16278521
=1.295

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)
=0.19168657 / 0.19485338
=0.9837

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)
=0.33066796 / 0.24666753
=1.3405

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(69.478 - 6.619 - 119.362) / 1293.001
=-0.0437

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

II-VI Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.94311.03420.83491.54440.79091.12580.95871.02890.94821.0501
GMI 0.88641.1020.97351.08450.94791.05541.05581.1130.90650.968
AQI 0.97260.76661.0461.44170.86871.14741.33431.2410.9680.9887
SGI 1.13191.20140.92421.18091.4571.02711.06711.23991.08591.1149
DEPI 1.00221.10521.01021.08120.81721.04480.84730.9520.98071.0923
SGAI 1.01170.91931.05721.01350.88841.0411.04111.01580.95991.0038
LVGI 0.75060.67720.69751.5471.08840.83421.76691.38010.83731.1448
TATA -0.0312-0.0301-0.0334-0.06590.0094-0.0494-0.074-0.0566-0.0657-0.0484
M-score -2.55-2.32-2.76-2.07-2.33-2.43-2.92-2.48-2.76-2.62

II-VI Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.25881.0240.94710.94820.79220.90241.0321.05011.01451.0102
GMI 1.10291.01590.95630.90650.89830.91860.9360.9680.9630.9524
AQI 1.06531.04571.00570.9680.98050.9951.04870.98870.95980.8777
SGI 1.25471.16831.12911.08591.03651.04971.06711.11491.15321.184
DEPI 0.86970.85050.92540.98071.00490.97611.15191.09231.14051.295
SGAI 0.93240.95870.94930.95991.0081.01281.04091.00380.99980.9837
LVGI 1.11290.87290.82850.83730.78010.81051.11271.14481.20431.3405
TATA -0.031-0.0417-0.0558-0.0657-0.0858-0.0719-0.0471-0.0484-0.0466-0.0437
M-score -2.12-2.44-2.64-2.76-3.03-2.85-2.65-2.62-2.63-2.66
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