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PMC-Sierra Inc (NAS:PMCS)
Beneish M-Score
-3.12 (As of Today)

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 -3.12 suggests that the company is not a manipulator.

PMCS' s 10-Year Beneish M-Score Range
Min: -6.23   Max: 1.42
Current: -3.12

-6.23
1.42

During the past 13 years, the highest Beneish M-Score of PMC-Sierra Inc was 1.42. The lowest was -6.23. And the median was -2.83.


Definition

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 * 0.9557+0.528 * 1.0122+0.404 * 1.027+0.892 * 1.0424+0.115 * 1.0391
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0167+4.679 * -0.1136-0.327 * 1.379
=-3.12

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $58.1 Mil.
Revenue was 124.767 + 133.071 + 136.851 + 135.462 = $530.2 Mil.
Gross Profit was 86.333 + 93.091 + 96.149 + 95.156 = $370.7 Mil.
Total Current Assets was $225.2 Mil.
Total Assets was $824.6 Mil.
Property, Plant and Equipment(Net PPE) was $37.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.3 Mil.
Selling, General & Admin. Expense(SGA) was $119.2 Mil.
Total Current Liabilities was $154.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -8.579 + 4.655 + 2.33 + 5.473 = $3.9 Mil.
Non Operating Income was -1.154 + 2.365 + 2.533 + 0.86 = $4.6 Mil.
Cash Flow from Operations was 33.384 + 8.035 + 29.103 + 22.455 = $93.0 Mil.
Accounts Receivable was $58.4 Mil.
Revenue was 126.822 + 126.468 + 126.872 + 128.411 = $508.6 Mil.
Gross Profit was 89.998 + 88.904 + 89.523 + 91.571 = $360.0 Mil.
Total Current Assets was $224.2 Mil.
Total Assets was $781.5 Mil.
Property, Plant and Equipment(Net PPE) was $38.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.5 Mil.
Selling, General & Admin. Expense(SGA) was $112.5 Mil.
Total Current Liabilities was $106.0 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(58.141 / 530.151) / (58.362 / 508.573)
=0.10966875 / 0.11475639
=0.9557

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(93.091 / 508.573) / (86.333 / 530.151)
=0.70785512 / 0.69928945
=1.0122

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (225.215 + 37.413) / 824.55) / (1 - (224.248 + 38.678) / 781.53)
=0.6814893 / 0.66357529
=1.027

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=530.151 / 508.573
=1.0424

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))
=(71.525 / (71.525 + 38.678)) / (62.257 / (62.257 + 37.413))
=0.64902952 / 0.62463128
=1.0391

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)
=(119.215 / 530.151) / (112.482 / 508.573)
=0.2248699 / 0.22117179
=1.0167

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 + 154.17) / 824.55) / ((0 + 105.968) / 781.53)
=0.18697471 / 0.13559044
=1.379

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(3.879 - 4.604 - 92.977) / 824.55
=-0.1136

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 -3.12 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

PMC-Sierra Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.6282010.87391.33621.06630.82981.29320.94380.9545
GMI 0.97711.10191.01180.99030.98070.98381.00210.96530.99231.0028
AQI 0.148313.30390.91190.99391.15320.98751.01440.85771.11611.0045
SGI 0.97991.45841.05741.16840.94491.281.03030.81150.95671.0346
DEPI 0.95210.73620.95410.95570.98471.10890.9771.23630.92781.0141
SGAI 1.24491.24720.92840.79660.96110.95761.10561.16861.04791.0029
LVGI 1.36810.80020.94010.48391.01911.58070.60091.16121.09340.69
TATA -0.029-0.1288-0.10680.0401-0.0645-0.0676-0.0801-0.4213-0.1376-0.1077
M-score -2.581.42-2.93-2.07-2.47-2.67-2.87-4.48-3.22-2.89

PMC-Sierra Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.09541.01561.05720.94381.01641.02640.92630.95451.05010.9557
GMI 0.98380.98490.98410.99230.99590.99591.0031.00281.00461.0122
AQI 1.03530.87261.04961.11611.02841.07771.03391.00450.99691.027
SGI 0.83320.86260.92140.95670.97190.98971.00991.03461.04491.0424
DEPI 1.15141.04330.9810.92780.91770.96030.98131.01411.05111.0391
SGAI 1.16361.13461.06941.04791.04661.00731.02511.00290.99031.0167
LVGI 1.10061.02330.73371.09340.78540.68510.80710.690.90841.379
TATA -0.3672-0.387-0.0886-0.1376-0.1405-0.1404-0.1416-0.1077-0.1019-0.1136
M-score -4.30-4.48-2.83-3.22-3.09-3.00-3.13-2.89-2.83-3.12
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