Switch to:
PMC-Sierra Inc (NAS:PMCS)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

PMCS' s 10-Year Beneish M-Score Range
Min: -6.23   Max: 1.42
Current: -3.13

-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 -2.77.


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 * 0.9263+0.528 * 1.003+0.404 * 1.0339+0.892 * 1.0099+0.115 * 0.9813
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0251+4.679 * -0.1416-0.327 * 0.8071
=-3.13

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $57.0 Mil.
Revenue was 135.462 + 126.822 + 126.468 + 126.872 = $515.6 Mil.
Gross Profit was 95.156 + 89.998 + 88.904 + 89.523 = $363.6 Mil.
Total Current Assets was $243.0 Mil.
Total Assets was $833.8 Mil.
Property, Plant and Equipment(Net PPE) was $38.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $68.4 Mil.
Selling, General & Admin. Expense(SGA) was $115.4 Mil.
Total Current Liabilities was $121.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 5.473 + -3.48 + -4.241 + -15.679 = $-17.9 Mil.
Non Operating Income was 0.86 + -0.794 + 0.464 + 2.416 = $2.9 Mil.
Cash Flow from Operations was 22.455 + 28.407 + 10.609 + 35.688 = $97.2 Mil.
Accounts Receivable was $60.9 Mil.
Revenue was 128.411 + 127.584 + 125.161 + 129.418 = $510.6 Mil.
Gross Profit was 91.571 + 89.947 + 87.774 + 91.824 = $361.1 Mil.
Total Current Assets was $276.4 Mil.
Total Assets was $880.4 Mil.
Property, Plant and Equipment(Net PPE) was $40.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $67.5 Mil.
Selling, General & Admin. Expense(SGA) was $111.4 Mil.
Total Current Liabilities was $147.9 Mil.
Long-Term Debt was $10.9 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)
=(57.013 / 515.624) / (60.948 / 510.574)
=0.11057088 / 0.11937153
=0.9263

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)
=(89.998 / 510.574) / (95.156 / 515.624)
=0.70727456 / 0.70512816
=1.003

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 - (243.014 + 38.73) / 833.805) / (1 - (276.373 + 40.24) / 880.435)
=0.66209845 / 0.64039026
=1.0339

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
=515.624 / 510.574
=1.0099

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))
=(67.542 / (67.542 + 40.24)) / (68.44 / (68.44 + 38.73))
=0.6266538 / 0.63861155
=0.9813

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)
=(115.364 / 515.624) / (111.434 / 510.574)
=0.22373668 / 0.2182524
=1.0251

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 + 121.339) / 833.805) / ((10.886 + 147.866) / 880.435)
=0.14552443 / 0.18031087
=0.8071

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
=(-17.927 - 2.946 - 97.159) / 833.805
=-0.1416

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 -3.13 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.00761.15691.29321.09541.01561.05720.94381.01641.02640.9263
GMI 0.95880.9670.96530.98380.98490.98410.99230.99590.99591.003
AQI 1.03550.8770.85771.03530.87261.04961.11611.02841.07771.0339
SGI 0.91640.83830.81150.83320.86260.92140.95670.97190.98971.0099
DEPI 1.1811.27581.23631.15141.04330.9810.92780.91770.96030.9813
SGAI 1.06511.1011.16861.16361.13461.06941.04791.04661.00731.0251
LVGI 1.04931.49761.16121.10061.02330.73371.09340.78540.68510.8071
TATA -0.1183-0.4209-0.4247-0.3672-0.387-0.0886-0.1376-0.1404-0.1404-0.1416
M-score -3.12-4.66-4.50-4.30-4.48-2.83-3.22-3.08-3.00-3.13
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK