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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.
Motorola Solutions, Inc. has a M-score of -2.47 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Motorola Solutions, Inc. was -1.50. The lowest was -3.58. And the median was -2.60.
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 * 1.021||+||0.528 * 1.0252||+||0.404 * 0.9691||+||0.892 * 0.9998||+||0.115 * 0.9044|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9365||+||4.679 * 0.0094||-||0.327 * 1.1694|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $1,920 Mil.|
Revenue was 2504 + 2112 + 2107 + 1973 = $8,696 Mil.
Gross Profit was 1213 + 1043 + 1029 + 955 = $4,240 Mil.
Total Current Assets was $7,020 Mil.
Total Assets was $11,851 Mil.
Property, Plant and Equipment(Net PPE) was $810 Mil.
Depreciation, Depletion and Amortization(DDA) was $228 Mil.
Selling, General & Admin. Expense(SGA) was $1,837 Mil.
Total Current Liabilities was $3,220 Mil.
Long-Term Debt was $2,457 Mil.
Net Income was 342 + 307 + 258 + 192 = $1,099 Mil.
Non Operating Income was 6 + 34 + -10 + 14 = $44 Mil.
Cash Flow from Operations was 741 + 152 + 82 + -31 = $944 Mil.
|Accounts Receivable was $1,881 Mil.
Revenue was 2441 + 2153 + 2148 + 1956 = $8,698 Mil.
Gross Profit was 1228 + 1087 + 1060 + 973 = $4,348 Mil.
Total Current Assets was $7,401 Mil.
Total Assets was $12,679 Mil.
Property, Plant and Equipment(Net PPE) was $839 Mil.
Depreciation, Depletion and Amortization(DDA) was $208 Mil.
Selling, General & Admin. Expense(SGA) was $1,962 Mil.
Total Current Liabilities was $3,335 Mil.
Long-Term Debt was $1,859 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)|
|=||(1920 / 8696)||/||(1881 / 8698)|
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)|
|=||(1043 / 8698)||/||(1213 / 8696)|
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 - (7020 + 810) / 11851)||/||(1 - (7401 + 839) / 12679)|
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))|
|=||(208 / (208 + 839))||/||(228 / (228 + 810))|
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)|
|=||(1837 / 8696)||/||(1962 / 8698)|
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)|
|=||((2457 + 3220) / 11851)||/||((1859 + 3335) / 12679)|
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|
|=||(1099 - 44||-||944)||/||11851|
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 -2.47 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
Motorola Solutions, Inc. Annual Data
Motorola Solutions, Inc. Quarterly Data