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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.
ON Semiconductor Corp has a M-score of -2.51 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of ON Semiconductor Corp was -0.99. The lowest was -4.44. And the median was -2.70.
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 ON Semiconductor Corp 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 * 1.0611||+||0.528 * 0.9278||+||0.404 * 1.4061||+||0.892 * 1.0986||+||0.115 * 1.0034|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0113||+||4.679 * -0.0582||-||0.327 * 1.0849|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $489 Mil.|
Revenue was 833.5 + 757.6 + 706.5 + 718 = $3,016 Mil.
Gross Profit was 284.1 + 273 + 250.8 + 252.9 = $1,061 Mil.
Total Current Assets was $1,813 Mil.
Total Assets was $3,882 Mil.
Property, Plant and Equipment(Net PPE) was $1,212 Mil.
Depreciation, Depletion and Amortization(DDA) was $240 Mil.
Selling, General & Admin. Expense(SGA) was $359 Mil.
Total Current Liabilities was $1,013 Mil.
Long-Term Debt was $980 Mil.
Net Income was 41.6 + 88 + 58.4 + 28.7 = $217 Mil.
Non Operating Income was -0.9 + -1.2 + -0.6 + -0.5 = $-3 Mil.
Cash Flow from Operations was 92.3 + 151.6 + 74.9 + 127 = $446 Mil.
|Accounts Receivable was $419 Mil.
Revenue was 715.4 + 688.3 + 661 + 680.2 = $2,745 Mil.
Gross Profit was 249.2 + 231.8 + 204.5 + 210.4 = $896 Mil.
Total Current Assets was $1,646 Mil.
Total Assets was $3,249 Mil.
Property, Plant and Equipment(Net PPE) was $1,093 Mil.
Depreciation, Depletion and Amortization(DDA) was $217 Mil.
Selling, General & Admin. Expense(SGA) was $323 Mil.
Total Current Liabilities was $878 Mil.
Long-Term Debt was $659 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)|
|=||(488.7 / 3015.6)||/||(419.2 / 2744.9)|
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)|
|=||(273 / 2744.9)||/||(284.1 / 3015.6)|
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 - (1813.2 + 1211.9) / 3882.2)||/||(1 - (1645.7 + 1092.9) / 3248.7)|
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))|
|=||(217.4 / (217.4 + 1092.9))||/||(240.1 / (240.1 + 1211.9))|
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)|
|=||(359.1 / 3015.6)||/||(323.2 / 2744.9)|
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)|
|=||((980.3 + 1013) / 3882.2)||/||((659.4 + 878.1) / 3248.7)|
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|
|=||(216.7 - -3.2||-||445.8)||/||3882.2|
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.
ON Semiconductor Corp has a M-score of -2.51 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
ON Semiconductor Corp Annual Data
ON Semiconductor Corp Quarterly Data