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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 -2.95.
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 * 1.0718||+||0.528 * 1.0552||+||0.404 * 0.9644||+||0.892 * 0.9348||+||0.115 * 0.5576|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9807||+||4.679 * -0.1776||-||0.327 * 1.0993|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $282 Mil.|
Revenue was 562.51 + 582.517 + 577.263 + 566.809 = $2,289 Mil.
Gross Profit was 286.351 + 303.701 + 315.268 + 314.077 = $1,219 Mil.
Total Current Assets was $2,279 Mil.
Total Assets was $3,945 Mil.
Property, Plant and Equipment(Net PPE) was $806 Mil.
Depreciation, Depletion and Amortization(DDA) was $338 Mil.
Selling, General & Admin. Expense(SGA) was $300 Mil.
Total Current Liabilities was $346 Mil.
Long-Term Debt was $1,000 Mil.
Net Income was -72.143 + 98.659 + 79.433 + -72.034 = $34 Mil.
Non Operating Income was 0 + 40.435 + 0 + 0 = $40 Mil.
Cash Flow from Operations was 117.339 + 221.79 + 182.064 + 172.855 = $694 Mil.
|Accounts Receivable was $282 Mil.
Revenue was 580.275 + 642.467 + 605.681 + 620.274 = $2,449 Mil.
Gross Profit was 338.821 + 368.96 + 339.937 + 328.672 = $1,376 Mil.
Total Current Assets was $2,028 Mil.
Total Assets was $4,305 Mil.
Property, Plant and Equipment(Net PPE) was $1,304 Mil.
Depreciation, Depletion and Amortization(DDA) was $257 Mil.
Selling, General & Admin. Expense(SGA) was $327 Mil.
Total Current Liabilities was $335 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)|
|=||(282.471 / 2289.099)||/||(281.932 / 2448.697)|
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)|
|=||(303.701 / 2448.697)||/||(286.351 / 2289.099)|
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 - (2279.046 + 805.58) / 3944.886)||/||(1 - (2027.779 + 1303.861) / 4305.125)|
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))|
|=||(257.153 / (257.153 + 1303.861))||/||(337.756 / (337.756 + 805.58))|
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)|
|=||(300.071 / 2289.099)||/||(327.293 / 2448.697)|
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 + 345.954) / 3944.886)||/||((1001.026 + 335.13) / 4305.125)|
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|
|=||(33.915 - 40.435||-||694.048)||/||3944.886|
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 -3.37 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