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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 Maxim Integrated Products Inc was -1.71. The lowest was -4.00. And the median was -2.93.
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 Maxim Integrated Products 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 * 0.9054||+||0.528 * 1.0351||+||0.404 * 0.8561||+||0.892 * 0.9903||+||0.115 * 0.7542|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0056||+||4.679 * -0.1213||-||0.327 * 1.0081|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $259 Mil.|
Revenue was 566.809 + 580.275 + 642.467 + 605.681 = $2,395 Mil.
Gross Profit was 314.077 + 338.821 + 368.96 + 339.937 = $1,362 Mil.
Total Current Assets was $2,073 Mil.
Total Assets was $4,125 Mil.
Property, Plant and Equipment(Net PPE) was $1,195 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $324 Mil.
Total Current Liabilities was $334 Mil.
Long-Term Debt was $1,000 Mil.
Net Income was -72.034 + 99.98 + 84.793 + 122.544 = $235 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 172.855 + 116.997 + 234.084 + 211.698 = $736 Mil.
|Accounts Receivable was $288 Mil.
Revenue was 620.274 + 585.241 + 608.194 + 604.884 = $2,419 Mil.
Gross Profit was 328.672 + 347.196 + 371.399 + 376.102 = $1,423 Mil.
Total Current Assets was $1,890 Mil.
Total Assets was $4,307 Mil.
Property, Plant and Equipment(Net PPE) was $1,372 Mil.
Depreciation, Depletion and Amortization(DDA) was $217 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $381 Mil.
Long-Term Debt was $1,001 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)|
|=||(258.506 / 2395.232)||/||(288.285 / 2418.593)|
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)|
|=||(338.821 / 2418.593)||/||(314.077 / 2395.232)|
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 - (2072.99 + 1195.323) / 4124.527)||/||(1 - (1890.136 + 1372.393) / 4306.882)|
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))|
|=||(217.119 / (217.119 + 1372.393))||/||(264.374 / (264.374 + 1195.323))|
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)|
|=||(323.6 / 2395.232)||/||(324.938 / 2418.593)|
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)|
|=||((1000 + 334.239) / 4124.527)||/||((1000.871 + 381.116) / 4306.882)|
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|
|=||(235.283 - 0||-||735.634)||/||4124.527|
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.
Maxim Integrated Products Inc has a M-score of -3.21 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
Maxim Integrated Products Inc Annual Data
Maxim Integrated Products Inc Quarterly Data