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PMC-Sierra Inc (NAS:PMCS)
Beneish M-Score
-3.10 (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 -3.10 suggests that the company is not a manipulator.

PMCS' s 10-Year Beneish M-Score Range
Min: -6.23   Max: 1.42
Current: -3.1

-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 -2.70.


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 * 0.9935+0.528 * 0.9963+0.404 * 1.0284+0.892 * 0.9719+0.115 * 0.9177
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0466+4.679 * -0.1399-0.327 * 0.7854
=-3.10

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $60.4 Mil.
Revenue was 126.468 + 126.105 + 128.855 + 127.907 = $509.3 Mil.
Gross Profit was 88.904 + 89.173 + 91.661 + 90.08 = $359.8 Mil.
Total Current Assets was $209.6 Mil.
Total Assets was $770.6 Mil.
Property, Plant and Equipment(Net PPE) was $38.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.6 Mil.
Selling, General & Admin. Expense(SGA) was $113.8 Mil.
Total Current Liabilities was $105.7 Mil.
Long-Term Debt was $9.2 Mil.
Net Income was -4.241 + -16.447 + -2.724 + -4.152 = $-27.6 Mil.
Non Operating Income was 0.464 + 2.386 + -0.136 + 2.243 = $5.0 Mil.
Cash Flow from Operations was 10.609 + 35.688 + 5.804 + 23.202 = $75.3 Mil.
Accounts Receivable was $62.6 Mil.
Revenue was 125.161 + 129.418 + 131.723 + 137.762 = $524.1 Mil.
Gross Profit was 87.774 + 91.824 + 92.733 + 96.509 = $368.8 Mil.
Total Current Assets was $261.6 Mil.
Total Assets was $892.6 Mil.
Property, Plant and Equipment(Net PPE) was $42.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.3 Mil.
Selling, General & Admin. Expense(SGA) was $111.9 Mil.
Total Current Liabilities was $154.4 Mil.
Long-Term Debt was $15.0 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)
=(60.426 / 509.335) / (62.578 / 524.064)
=0.11863705 / 0.11940908
=0.9935

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)
=(89.173 / 524.064) / (88.904 / 509.335)
=0.70380717 / 0.70644664
=0.9963

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 - (209.597 + 38.255) / 770.649) / (1 - (261.596 + 42.208) / 892.626)
=0.67838536 / 0.65965141
=1.0284

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
=509.335 / 524.064
=0.9719

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))
=(64.348 / (64.348 + 42.208)) / (73.611 / (73.611 + 38.255))
=0.60388903 / 0.65802836
=0.9177

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)
=(113.768 / 509.335) / (111.85 / 524.064)
=0.22336576 / 0.21342813
=1.0466

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)
=((9.208 + 105.679) / 770.649) / ((14.983 + 154.442) / 892.626)
=0.14907824 / 0.18980514
=0.7854

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
=(-27.564 - 4.957 - 75.303) / 770.649
=-0.1399

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 -3.10 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 0.77251.6282010.82431.33621.13640.88411.26030.8929
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 -1.83-2.581.42-2.93-2.11-2.47-2.60-2.82-4.51-3.27

PMC-Sierra Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.88410.83190.9971.18231.26031.08771.03831.00430.89290.9935
GMI 1.00210.95960.95880.9670.96530.98380.98520.9850.99260.9963
AQI 1.01440.89461.03550.8770.85771.03530.87261.04961.11611.0284
SGI 1.03030.98320.91640.83830.81150.83320.86320.92280.95670.9719
DEPI 0.9771.08941.1811.27581.23631.15141.04330.9810.92780.9177
SGAI 1.10561.02971.06511.1011.16861.16361.13391.06781.04791.0466
LVGI 0.60090.89521.04931.49761.16121.10061.02330.73371.09340.7854
TATA -0.0801-0.1264-0.1183-0.4209-0.4247-0.3672-0.387-0.0873-0.1371-0.1399
M-score -2.82-3.27-3.12-4.64-4.53-4.30-4.46-2.87-3.26-3.10
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