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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.
LSI Corp has a M-score of -2.77 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of LSI Corp was -1.88. The lowest was -4.27. And the median was -2.94.
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 LSI Corp 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 * 1.1644||+||0.528 * 0.9831||+||0.404 * 0.8094||+||0.892 * 0.9667||+||0.115 * 1.0324|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9637||+||4.679 * -0.0754||-||0.327 * 0.9602|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $251 Mil.|
Revenue was 569.066 + 605.067 + 606.943 + 589.583 = $2,371 Mil.
Gross Profit was 291.125 + 310.834 + 312.68 + 299.259 = $1,214 Mil.
Total Current Assets was $1,381 Mil.
Total Assets was $2,399 Mil.
Property, Plant and Equipment(Net PPE) was $299 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $330 Mil.
Total Current Liabilities was $454 Mil.
Long-Term Debt was $0 Mil.
Net Income was 33.233 + 45.043 + 36.559 + 24.62 = $139 Mil.
Non Operating Income was 1.2 + 0 + 0 + 1.148 = $2 Mil.
Cash Flow from Operations was 43.013 + 134.216 + 62.929 + 77.82 = $318 Mil.
|Accounts Receivable was $223 Mil.
Revenue was 568.636 + 600.128 + 623.962 + 659.573 = $2,452 Mil.
Gross Profit was 289.504 + 300.414 + 312.651 + 331.888 = $1,234 Mil.
Total Current Assets was $1,133 Mil.
Total Assets was $2,241 Mil.
Property, Plant and Equipment(Net PPE) was $278 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $354 Mil.
Total Current Liabilities was $442 Mil.
Long-Term Debt was $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)|
|=||(251.223 / 2370.659)||/||(223.185 / 2452.299)|
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)|
|=||(310.834 / 2452.299)||/||(291.125 / 2370.659)|
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 - (1381.48 + 298.582) / 2399.477)||/||(1 - (1132.832 + 277.995) / 2240.895)|
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))|
|=||(179.401 / (179.401 + 277.995))||/||(182.922 / (182.922 + 298.582))|
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)|
|=||(330.099 / 2370.659)||/||(354.318 / 2452.299)|
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)|
|=||((0 + 453.957) / 2399.477)||/||((0 + 441.528) / 2240.895)|
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|
|=||(139.455 - 2.348||-||317.978)||/||2399.477|
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.
LSI Corp has a M-score of -2.77 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
LSI Corp Annual Data
LSI Corp Quarterly Data