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PMC-Sierra Inc (NAS:PMCS)
Beneish M-Score
-3.00 (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 -3.00 suggests that the company is not a manipulator.

PMCS' s 10-Year Beneish M-Score Range
Min: -6.23   Max: 1.42
Current: -3

-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 -2.74.


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 * 1.0271+0.528 * 0.996+0.404 * 1.0777+0.892 * 0.989+0.115 * 0.9603
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0079+4.679 * -0.1407-0.327 * 0.6851
=-3.00

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $58.4 Mil.
Revenue was 126.822 + 126.468 + 126.105 + 128.855 = $508.3 Mil.
Gross Profit was 89.998 + 88.904 + 89.173 + 91.661 = $359.7 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.
Net Income was -3.48 + -4.241 + -16.447 + -2.724 = $-26.9 Mil.
Non Operating Income was -0.794 + 0.464 + 2.386 + -0.136 = $1.9 Mil.
Cash Flow from Operations was 28.407 + 10.609 + 35.688 + 6.436 = $81.1 Mil.
Accounts Receivable was $57.5 Mil.
Revenue was 127.584 + 125.161 + 129.418 + 131.723 = $513.9 Mil.
Gross Profit was 89.947 + 87.774 + 91.824 + 92.733 = $362.3 Mil.
Total Current Assets was $304.9 Mil.
Total Assets was $896.9 Mil.
Property, Plant and Equipment(Net PPE) was $39.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.7 Mil.
Selling, General & Admin. Expense(SGA) was $112.8 Mil.
Total Current Liabilities was $165.7 Mil.
Long-Term Debt was $11.8 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)
=(58.362 / 508.25) / (57.454 / 513.886)
=0.11482932 / 0.11180301
=1.0271

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)
=(88.904 / 513.886) / (89.998 / 508.25)
=0.70497737 / 0.70779341
=0.996

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 - (224.248 + 38.678) / 781.53) / (1 - (304.94 + 39.705) / 896.857)
=0.66357529 / 0.61571912
=1.0777

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
=508.25 / 513.886
=0.989

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))
=(65.679 / (65.679 + 39.705)) / (71.525 / (71.525 + 38.678))
=0.62323503 / 0.64902952
=0.9603

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)
=(112.482 / 508.25) / (112.837 / 513.886)
=0.22131235 / 0.21957594
=1.0079

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 + 105.968) / 781.53) / ((11.751 + 165.739) / 896.857)
=0.13559044 / 0.19790223
=0.6851

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
=(-26.892 - 1.92 - 81.14) / 781.53
=-0.1407

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 -3.00 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.77251.6282010.87391.33621.06630.82981.29320.9438
GMI 0.9180.97711.10191.01180.99030.98070.98381.00210.96530.9923
AQI 2.62740.148313.30390.91190.99391.15320.98751.01440.85771.1161
SGI 1.1920.97991.45841.05741.16840.94491.281.03030.81150.9567
DEPI 1.15970.95210.73620.95410.95570.98471.10890.9771.23630.9278
SGAI 0.84191.24491.24720.92840.79660.96110.95761.10561.16861.0479
LVGI 0.59341.36810.80020.94010.48391.01911.58070.60091.16121.0934
TATA -0.0222-0.029-0.1288-0.10680.0401-0.0645-0.0676-0.0801-0.4213-0.1376
M-score -1.83-2.581.42-2.93-2.07-2.47-2.67-2.87-4.48-3.22

PMC-Sierra Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.79791.00761.15691.29321.09541.01561.05630.94441.01711.0271
GMI 0.95960.95880.9670.96530.98380.98490.98480.99240.9960.996
AQI 0.89461.03550.8770.85771.03530.87261.04961.11611.02841.0777
SGI 0.98320.91640.83830.81150.83320.86260.92220.95610.97130.989
DEPI 1.08941.1811.27581.23631.15141.04330.9810.92780.91770.9603
SGAI 1.02971.06511.1011.16861.16361.13461.06851.04861.04721.0079
LVGI 0.89521.04931.49761.16121.10061.02330.73371.09340.78540.6851
TATA -0.1264-0.1183-0.4209-0.4247-0.3672-0.387-0.088-0.1379-0.1408-0.1407
M-score -3.30-3.12-4.66-4.50-4.30-4.48-2.82-3.22-3.09-3.00
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