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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 -2.58 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 -4.48. 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 * 1.1601||+||0.528 * 0.9309||+||0.404 * 0.8835||+||0.892 * 1.0059||+||0.115 * 1.0703|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9917||+||4.679 * -0.0402||-||0.327 * 0.9773|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $448 Mil.|
Revenue was 706.5 + 718 + 715.4 + 688.3 = $2,828 Mil.
Gross Profit was 250.8 + 252.9 + 249.2 + 231.8 = $985 Mil.
Total Current Assets was $1,737 Mil.
Total Assets was $3,287 Mil.
Property, Plant and Equipment(Net PPE) was $1,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $213 Mil.
Selling, General & Admin. Expense(SGA) was $329 Mil.
Total Current Liabilities was $824 Mil.
Long-Term Debt was $747 Mil.
Net Income was 58.4 + 28.7 + 51.8 + 47.7 = $187 Mil.
Non Operating Income was -0.6 + -0.5 + -1.4 + 4.1 = $2 Mil.
Cash Flow from Operations was 74.9 + 127 + 59.9 + 55.2 = $317 Mil.
|Accounts Receivable was $384 Mil.
Revenue was 661 + 680.2 + 725.5 + 744.8 = $2,812 Mil.
Gross Profit was 204.5 + 210.4 + 238 + 258.3 = $911 Mil.
Total Current Assets was $1,618 Mil.
Total Assets was $3,233 Mil.
Property, Plant and Equipment(Net PPE) was $1,094 Mil.
Depreciation, Depletion and Amortization(DDA) was $234 Mil.
Selling, General & Admin. Expense(SGA) was $330 Mil.
Total Current Liabilities was $874 Mil.
Long-Term Debt was $707 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)|
|=||(447.9 / 2828.2)||/||(383.8 / 2811.5)|
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)|
|=||(252.9 / 2811.5)||/||(250.8 / 2828.2)|
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 - (1737.3 + 1081.4) / 3286.7)||/||(1 - (1617.5 + 1094.2) / 3232.7)|
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))|
|=||(233.8 / (233.8 + 1094.2))||/||(212.9 / (212.9 + 1081.4))|
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)|
|=||(329.1 / 2828.2)||/||(329.9 / 2811.5)|
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)|
|=||((746.5 + 824.2) / 3286.7)||/||((706.8 + 874) / 3232.7)|
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|
|=||(186.6 - 1.6||-||317)||/||3286.7|
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 -2.58 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