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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 Micron Technology Inc was 4.67. The lowest was -14.31. And the median was -2.98.
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 Micron Technology 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 * 1.0196||+||0.528 * 1.4774||+||0.404 * 0.6503||+||0.892 * 0.76||+||0.115 * 1.1038|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.213||+||4.679 * -0.1078||-||0.327 * 1.1389|
|This Year (May16) TTM:||Last Year (May15) TTM:|
|Accounts Receivable was $1,752 Mil.|
Revenue was 2898 + 2934 + 3350 + 3600 = $12,782 Mil.
Gross Profit was 498 + 579 + 849 + 970 = $2,896 Mil.
Total Current Assets was $10,110 Mil.
Total Assets was $27,001 Mil.
Property, Plant and Equipment(Net PPE) was $13,209 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,976 Mil.
Selling, General & Admin. Expense(SGA) was $672 Mil.
Total Current Liabilities was $4,500 Mil.
Long-Term Debt was $8,919 Mil.
Net Income was -215 + -97 + 206 + 471 = $365 Mil.
Non Operating Income was -34 + -6 + -4 + 18 = $-26 Mil.
Cash Flow from Operations was 389 + 763 + 1120 + 1030 = $3,302 Mil.
|Accounts Receivable was $2,261 Mil.
Revenue was 3853 + 4166 + 4573 + 4227 = $16,819 Mil.
Gross Profit was 1202 + 1405 + 1638 + 1385 = $5,630 Mil.
Total Current Assets was $10,008 Mil.
Total Assets was $25,136 Mil.
Property, Plant and Equipment(Net PPE) was $9,857 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,510 Mil.
Selling, General & Admin. Expense(SGA) was $729 Mil.
Total Current Liabilities was $4,566 Mil.
Long-Term Debt was $6,403 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)|
|=||(1752 / 12782)||/||(2261 / 16819)|
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)|
|=||(5630 / 16819)||/||(2896 / 12782)|
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 - (10110 + 13209) / 27001)||/||(1 - (10008 + 9857) / 25136)|
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))|
|=||(2510 / (2510 + 9857))||/||(2976 / (2976 + 13209))|
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)|
|=||(672 / 12782)||/||(729 / 16819)|
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)|
|=||((8919 + 4500) / 27001)||/||((6403 + 4566) / 25136)|
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|
|=||(365 - -26||-||3302)||/||27001|
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.
Micron Technology Inc has a M-score of -3.14 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
Micron Technology Inc Annual Data
Micron Technology Inc Quarterly Data