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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 -2.95.
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 * 0.9701||+||0.528 * 0.8861||+||0.404 * 0.789||+||0.892 * 1.0003||+||0.115 * 1.3611|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9715||+||4.679 * -0.0605||-||0.327 * 0.9493|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $224 Mil.|
Revenue was 550.998 + 561.396 + 566.126 + 555.252 = $2,234 Mil.
Gross Profit was 340.178 + 345.732 + 347.027 + 318.841 = $1,352 Mil.
Total Current Assets was $2,623 Mil.
Total Assets was $3,948 Mil.
Property, Plant and Equipment(Net PPE) was $661 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $261 Mil.
Long-Term Debt was $991 Mil.
Net Income was 130.477 + 137.614 + 92.339 + 139.81 = $500 Mil.
Non Operating Income was 0 + 0 + 0.962 + 0 = $1 Mil.
Cash Flow from Operations was 192.63 + 123.402 + 254.071 + 167.986 = $738 Mil.
|Accounts Receivable was $231 Mil.
Revenue was 510.831 + 562.51 + 582.517 + 577.263 = $2,233 Mil.
Gross Profit was 292.169 + 286.351 + 303.701 + 315.268 = $1,197 Mil.
Total Current Assets was $2,327 Mil.
Total Assets was $3,937 Mil.
Property, Plant and Equipment(Net PPE) was $771 Mil.
Depreciation, Depletion and Amortization(DDA) was $315 Mil.
Selling, General & Admin. Expense(SGA) was $294 Mil.
Total Current Liabilities was $315 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)|
|=||(224.342 / 2233.772)||/||(231.18 / 2233.121)|
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)|
|=||(1197.489 / 2233.121)||/||(1351.778 / 2233.772)|
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 - (2622.562 + 660.66) / 3947.974)||/||(1 - (2326.629 + 770.548) / 3937.481)|
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))|
|=||(315.213 / (315.213 + 770.548))||/||(179.127 / (179.127 + 660.66))|
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)|
|=||(285.656 / 2233.772)||/||(293.936 / 2233.121)|
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)|
|=||((991.281 + 260.673) / 3947.974)||/||((1000 + 315.251) / 3937.481)|
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|
|=||(500.24 - 0.962||-||738.089)||/||3947.974|
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 -2.87 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