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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 -2.72 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 -2.71.
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 * 1.0201||+||0.528 * 0.907||+||0.404 * 0.9427||+||0.892 * 1.0517||+||0.115 * 1.059|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9879||+||4.679 * -0.0535||-||0.327 * 0.9736|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $437 Mil.|
Revenue was 757.6 + 706.5 + 718 + 715.4 = $2,898 Mil.
Gross Profit was 273 + 250.8 + 252.9 + 249.2 = $1,026 Mil.
Total Current Assets was $1,762 Mil.
Total Assets was $3,418 Mil.
Property, Plant and Equipment(Net PPE) was $1,142 Mil.
Depreciation, Depletion and Amortization(DDA) was $219 Mil.
Selling, General & Admin. Expense(SGA) was $338 Mil.
Total Current Liabilities was $869 Mil.
Long-Term Debt was $736 Mil.
Net Income was 88 + 58.4 + 28.7 + 51.8 = $227 Mil.
Non Operating Income was -1.2 + -0.6 + -0.5 + -1.4 = $-4 Mil.
Cash Flow from Operations was 151.6 + 74.9 + 127 + 59.9 = $413 Mil.
|Accounts Receivable was $408 Mil.
Revenue was 688.3 + 661 + 680.2 + 725.5 = $2,755 Mil.
Gross Profit was 231.8 + 204.5 + 210.4 + 238 = $885 Mil.
Total Current Assets was $1,622 Mil.
Total Assets was $3,241 Mil.
Property, Plant and Equipment(Net PPE) was $1,102 Mil.
Depreciation, Depletion and Amortization(DDA) was $226 Mil.
Selling, General & Admin. Expense(SGA) was $326 Mil.
Total Current Liabilities was $877 Mil.
Long-Term Debt was $686 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)|
|=||(437.3 / 2897.5)||/||(407.6 / 2755)|
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)|
|=||(250.8 / 2755)||/||(273 / 2897.5)|
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 - (1761.6 + 1141.7) / 3418.4)||/||(1 - (1621.8 + 1101.5) / 3241.4)|
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))|
|=||(225.8 / (225.8 + 1101.5))||/||(218.5 / (218.5 + 1141.7))|
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)|
|=||(338.2 / 2897.5)||/||(325.5 / 2755)|
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)|
|=||((735.5 + 869.3) / 3418.4)||/||((686.3 + 876.6) / 3241.4)|
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|
|=||(226.9 - -3.7||-||413.4)||/||3418.4|
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 -2.72 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