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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 -1.59. The lowest was -3.79. And the median was -2.94.
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 * 1.0707||+||0.528 * 1.04||+||0.404 * 0.9704||+||0.892 * 0.9342||+||0.115 * 0.6793|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9739||+||4.679 * -0.1246||-||0.327 * 1.0365|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $279 Mil.|
Revenue was 555.252 + 510.831 + 562.51 + 582.517 = $2,211 Mil.
Gross Profit was 318.841 + 292.169 + 286.351 + 303.701 = $1,201 Mil.
Total Current Assets was $2,462 Mil.
Total Assets was $3,981 Mil.
Property, Plant and Equipment(Net PPE) was $749 Mil.
Depreciation, Depletion and Amortization(DDA) was $291 Mil.
Selling, General & Admin. Expense(SGA) was $290 Mil.
Total Current Liabilities was $342 Mil.
Long-Term Debt was $1,000 Mil.
Net Income was 139.81 + 67.469 + -72.143 + 98.659 = $234 Mil.
Non Operating Income was 0 + 0 + 0 + 40.435 = $40 Mil.
Cash Flow from Operations was 167.986 + 182.489 + 117.339 + 221.79 = $690 Mil.
|Accounts Receivable was $278 Mil.
Revenue was 577.263 + 566.809 + 580.275 + 642.467 = $2,367 Mil.
Gross Profit was 315.268 + 314.077 + 338.821 + 368.96 = $1,337 Mil.
Total Current Assets was $2,181 Mil.
Total Assets was $4,168 Mil.
Property, Plant and Equipment(Net PPE) was $1,156 Mil.
Depreciation, Depletion and Amortization(DDA) was $271 Mil.
Selling, General & Admin. Expense(SGA) was $319 Mil.
Total Current Liabilities was $355 Mil.
Long-Term Debt was $1,000 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)|
|=||(278.502 / 2211.11)||/||(278.427 / 2366.814)|
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)|
|=||(292.169 / 2366.814)||/||(318.841 / 2211.11)|
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 - (2461.91 + 748.781) / 3981.468)||/||(1 - (2180.688 + 1155.589) / 4167.717)|
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))|
|=||(271.148 / (271.148 + 1155.589))||/||(290.862 / (290.862 + 748.781))|
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)|
|=||(289.948 / 2211.11)||/||(318.686 / 2366.814)|
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 + 342.033) / 3981.468)||/||((1000 + 355.334) / 4167.717)|
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|
|=||(233.795 - 40.435||-||689.604)||/||3981.468|
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 -3.09 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