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PMC-Sierra Inc (NAS:PMCS)
Beneish M-Score
-2.91 (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 -2.91 suggests that the company is not a manipulator.

PMCS' s Beneish M-Score Range Over the Past 10 Years
Min: -6.23   Max: 1.42
Current: -2.91

-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 -2.82.


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 * 1.0661+0.528 * 1.0036+0.404 * 1.0198+0.892 * 1.0245+0.115 * 1.0293
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9984+4.679 * -0.1056-0.327 * 1.0895
=-2.91

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $62.3 Mil.
Revenue was 133.574 + 124.767 + 133.071 + 136.851 = $528.3 Mil.
Gross Profit was 95.575 + 86.333 + 93.091 + 96.149 = $371.1 Mil.
Total Current Assets was $229.0 Mil.
Total Assets was $821.5 Mil.
Property, Plant and Equipment(Net PPE) was $37.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $61.9 Mil.
Selling, General & Admin. Expense(SGA) was $118.0 Mil.
Total Current Liabilities was $130.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 6.718 + -8.579 + 4.655 + 2.33 = $5.1 Mil.
Non Operating Income was 2.261 + -1.154 + 2.365 + 2.533 = $6.0 Mil.
Cash Flow from Operations was 15.372 + 33.384 + 8.035 + 29.103 = $85.9 Mil.
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.



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)
=(62.269 / 528.263) / (57.013 / 515.624)
=0.117875 / 0.11057088
=1.0661

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)
=(86.333 / 515.624) / (95.575 / 528.263)
=0.70512816 / 0.70258186
=1.0036

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 - (228.97 + 37.871) / 821.504) / (1 - (243.014 + 38.73) / 833.805)
=0.67517991 / 0.66209845
=1.0198

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
=528.263 / 515.624
=1.0245

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))
=(68.44 / (68.44 + 38.73)) / (61.904 / (61.904 + 37.871))
=0.63861155 / 0.62043598
=1.0293

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)
=(118 / 528.263) / (115.364 / 515.624)
=0.22337358 / 0.22373668
=0.9984

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 + 130.252) / 821.504) / ((0 + 121.339) / 833.805)
=0.15855309 / 0.14552443
=1.0895

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
=(5.124 - 6.005 - 85.894) / 821.504
=-0.1056

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 -2.91 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 1.36810.80020.94010.48391.01911.58070.60091.03821.22290.69
TATA -0.029-0.1288-0.10680.0401-0.0645-0.0676-0.0801-0.4213-0.1376-0.1077
M-score -2.581.42-2.93-2.07-2.47-2.67-2.87-4.44-3.26-2.89

PMC-Sierra Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.01561.05720.94381.01641.02640.92630.95451.05010.95571.0661
GMI 0.98490.98410.99230.99590.99591.0031.00281.00461.01221.0036
AQI 0.87261.04961.11611.02841.07771.03391.00450.99691.0271.0198
SGI 0.86260.92140.95670.97190.98971.00991.03461.04491.04241.0245
DEPI 1.04330.9810.92780.91770.96030.98131.01411.05111.03911.0293
SGAI 1.13461.06941.04791.04661.00731.02511.00290.99031.01670.9984
LVGI 1.04350.68951.22290.86160.68510.86650.690.90841.3791.0895
TATA -0.387-0.0886-0.1376-0.1405-0.1404-0.1416-0.1077-0.1019-0.1136-0.1056
M-score -4.49-2.81-3.26-3.11-3.00-3.15-2.89-2.83-3.12-2.91
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