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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 -2.51.
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 * 1.2588||+||0.528 * 1.1029||+||0.404 * 1.0653||+||0.892 * 1.2547||+||0.115 * 0.9133|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9324||+||4.679 * -0.031||-||0.327 * 1.1129|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $162.3 Mil.|
Revenue was 185.833 + 187.921 + 173.555 + 171.765 = $719.1 Mil.
Gross Profit was 67.859 + 62.321 + 54.69 + 53.394 = $238.3 Mil.
Total Current Assets was $502.9 Mil.
Total Assets was $1,062.1 Mil.
Property, Plant and Equipment(Net PPE) was $207.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.5 Mil.
Selling, General & Admin. Expense(SGA) was $138.1 Mil.
Total Current Liabilities was $135.2 Mil.
Long-Term Debt was $216.7 Mil.
Net Income was 12.302 + 12.655 + 8.531 + 7.569 = $41.1 Mil.
Non Operating Income was -1.682 + 0.868 + 1.694 + 1.125 = $2.0 Mil.
Cash Flow from Operations was 0.856 + 26.857 + 12.731 + 31.487 = $71.9 Mil.
|Accounts Receivable was $102.8 Mil.
Revenue was 150.02 + 154.03 + 143.94 + 125.107 = $573.1 Mil.
Gross Profit was 56.311 + 54.896 + 50.954 + 47.268 = $209.4 Mil.
Total Current Assets was $492.8 Mil.
Total Assets was $999.5 Mil.
Property, Plant and Equipment(Net PPE) was $195.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.9 Mil.
Selling, General & Admin. Expense(SGA) was $118.1 Mil.
Total Current Liabilities was $106.5 Mil.
Long-Term Debt was $191.1 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)|
|=||(162.341 / 719.074)||/||(102.782 / 573.097)|
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)|
|=||(62.321 / 573.097)||/||(67.859 / 719.074)|
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 - (502.93 + 207.303) / 1062.085)||/||(1 - (492.777 + 195.911) / 999.518)|
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))|
|=||(36.9 / (36.9 + 195.911))||/||(43.53 / (43.53 + 207.303))|
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)|
|=||(138.134 / 719.074)||/||(118.074 / 573.097)|
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)|
|=||((216.733 + 135.216) / 1062.085)||/||((191.072 + 106.548) / 999.518)|
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|
|=||(41.057 - 2.005||-||71.931)||/||1062.085|
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 -2.11 signals that the company is likely to 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