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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.
PMC-Sierra, Inc. has a M-score of -3.30 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of PMC-Sierra, Inc. was 1.42. The lowest was -5.98. And the median was -2.59.
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 PMC-Sierra, 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 * 0.8929||+||0.528 * 0.9923||+||0.404 * 1.1161||+||0.892 * 0.9567||+||0.115 * 0.9278|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0479||+||4.679 * -0.1351||-||0.327 * 1.2229|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $58.8 Mil.|
Revenue was 126.105 + 128.855 + 127.907 + 125.161 = $508.0 Mil.
Gross Profit was 89.173 + 91.661 + 90.08 + 87.901 = $358.8 Mil.
Total Current Assets was $269.4 Mil.
Total Assets was $850.0 Mil.
Property, Plant and Equipment(Net PPE) was $39.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.4 Mil.
Selling, General & Admin. Expense(SGA) was $112.8 Mil.
Total Current Liabilities was $179.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -16.447 + -2.724 + -4.152 + -6.825 = $-30.1 Mil.
Non Operating Income was 2.386 + -0.136 + 2.243 + 1.349 = $5.8 Mil.
Cash Flow from Operations was 35.688 + 5.804 + 22.971 + 14.379 = $78.8 Mil.
|Accounts Receivable was $68.8 Mil.
Revenue was 129.418 + 131.723 + 137.762 + 132.094 = $531.0 Mil.
Gross Profit was 91.824 + 92.733 + 96.509 + 91.082 = $372.1 Mil.
Total Current Assets was $342.9 Mil.
Total Assets was $899.3 Mil.
Property, Plant and Equipment(Net PPE) was $43.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.5 Mil.
Selling, General & Admin. Expense(SGA) was $112.5 Mil.
Total Current Liabilities was $155.5 Mil.
Long-Term Debt was $0.0 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)|
|=||(58.752 / 508.028)||/||(68.773 / 530.997)|
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)|
|=||(91.661 / 530.997)||/||(89.173 / 508.028)|
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 - (269.439 + 39.149) / 849.951)||/||(1 - (342.937 + 43.146) / 899.275)|
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))|
|=||(64.535 / (64.535 + 43.146))||/||(71.432 / (71.432 + 39.149))|
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)|
|=||(112.77 / 508.028)||/||(112.479 / 530.997)|
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)|
|=||((0 + 179.741) / 849.951)||/||((0 + 155.505) / 899.275)|
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|
|=||(-30.148 - 5.842||-||78.842)||/||849.951|
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.
PMC-Sierra, Inc. has a M-score of -3.30 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
PMC-Sierra, Inc. Annual Data
PMC-Sierra, Inc. Quarterly Data