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Motorola Solutions Inc (NYSE:MSI)
Beneish M-Score
-2.63 (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.

Motorola Solutions Inc has a M-score of -2.63 suggests that the company is not a manipulator.

MSI' s 10-Year Beneish M-Score Range
Min: -3.72   Max: -0.87
Current: -2.63

-3.72
-0.87

During the past 13 years, the highest Beneish M-Score of Motorola Solutions Inc was -0.87. The lowest was -3.72. And the median was -2.61.


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 Motorola Solutions 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 * 0.7555+0.528 * 1.0363+0.404 * 0.9404+0.892 * 0.9685+0.115 * 0.6826
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9456+4.679 * 0.0329-0.327 * 1.0488
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,249 Mil.
Revenue was 1393 + 1801 + 2504 + 2112 = $7,810 Mil.
Gross Profit was 656 + 845 + 1213 + 1043 = $3,757 Mil.
Total Current Assets was $7,066 Mil.
Total Assets was $11,868 Mil.
Property, Plant and Equipment(Net PPE) was $682 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $1,642 Mil.
Total Current Liabilities was $2,924 Mil.
Long-Term Debt was $2,446 Mil.
Net Income was 824 + 127 + 342 + 307 = $1,600 Mil.
Non Operating Income was -11 + 6 + 6 + 34 = $35 Mil.
Cash Flow from Operations was 84 + 46 + 741 + 303 = $1,174 Mil.
Accounts Receivable was $1,707 Mil.
Revenue was 1497 + 1973 + 2441 + 2153 = $8,064 Mil.
Gross Profit was 750 + 955 + 1228 + 1087 = $4,020 Mil.
Total Current Assets was $6,841 Mil.
Total Assets was $12,160 Mil.
Property, Plant and Equipment(Net PPE) was $830 Mil.
Depreciation, Depletion and Amortization(DDA) was $178 Mil.
Selling, General & Admin. Expense(SGA) was $1,793 Mil.
Total Current Liabilities was $2,794 Mil.
Long-Term Debt was $2,452 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)
=(1249 / 7810) / (1707 / 8064)
=0.15992318 / 0.21168155
=0.7555

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)
=(845 / 8064) / (656 / 7810)
=0.4985119 / 0.48104994
=1.0363

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 - (7066 + 682) / 11868) / (1 - (6841 + 830) / 12160)
=0.34715201 / 0.36916118
=0.9404

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
=7810 / 8064
=0.9685

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))
=(178 / (178 + 830)) / (238 / (238 + 682))
=0.1765873 / 0.25869565
=0.6826

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)
=(1642 / 7810) / (1793 / 8064)
=0.21024328 / 0.22234623
=0.9456

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)
=((2446 + 2924) / 11868) / ((2452 + 2794) / 12160)
=0.45247725 / 0.43141447
=1.0488

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
=(1600 - 35 - 1174) / 11868
=0.0329

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.

Motorola Solutions Inc has a M-score of -2.63 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 own currency.

Motorola Solutions Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96980.86271.09260.83020.7971.3532.73670.53020.95071.021
GMI 0.96461.03651.0921.09220.97580.88030.63210.99021.01111.025
AQI 0.85960.66550.86172.09490.99631.04640.86441.16991.14340.9691
SGI 1.28111.18881.2160.85410.82320.6020.41971.07691.06030.9998
DEPI 0.70010.92591.06790.741.05130.97331.53860.58461.45980.9044
SGAI 0.83360.871.02091.32371.0331.17321.460.94740.96820.9365
LVGI 0.97850.93271.02561.00841.11440.86020.93890.83271.15391.1694
TATA -0.0931-0.0523-0.0001-0.0194-0.1506-0.0313-0.00830.0256-0.01670.0095
M-score -2.77-2.76-2.21-2.45-3.58-2.69-1.68-2.64-2.48-2.47

Motorola Solutions Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.14370.95041.04070.95070.91461.13021.1411.0981.20440.7555
GMI 0.99981.01131.01211.01111.01421.00381.00931.02051.0211.0363
AQI 1.16621.18791.14691.14341.03821.09441.18860.96910.99420.9404
SGI 1.06771.08211.06671.06031.04680.94990.93760.92960.90810.9685
DEPI 1.02851.13251.32721.45981.36041.43551.04710.90440.89090.6826
SGAI 0.95090.93970.95310.96780.96870.97440.95450.93530.94480.9456
LVGI 0.89571.09271.07341.15391.11991.08441.05941.16941.11481.0488
TATA 0.0294-0.01670.0129-0.0166-0.00510.02590.0230.0088-0.00260.0329
M-score -2.04-2.45-2.24-2.48-2.51-2.22-2.22-2.47-2.42-2.63
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