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PMC-Sierra, Inc. (NAS:PMCS)
Beneish M-Score
-3.30 (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 -3.30 suggests that the company is not a manipulator.

PMCS' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.42
Current: -3.3

-5.98
1.42

During the past 13 years, the highest Beneish M-Score of PMC-Sierra, Inc. was 1.42. The lowest was -5.98. And the median was -2.59.


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 * 0.8929+0.528 * 0.9923+0.404 * 1.1161+0.892 * 0.9567+0.115 * 0.9278
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0479+4.679 * -0.1351-0.327 * 1.2229
=-3.30

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $58.8 Mil.
Revenue was 126.105 + 128.855 + 127.907 + 125.161 = $508.0 Mil.
Gross Profit was 89.173 + 91.661 + 90.08 + 87.901 = $358.8 Mil.
Total Current Assets was $269.4 Mil.
Total Assets was $850.0 Mil.
Property, Plant and Equipment(Net PPE) was $39.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.4 Mil.
Selling, General & Admin. Expense(SGA) was $112.8 Mil.
Total Current Liabilities was $179.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -16.447 + -2.724 + -4.152 + -6.825 = $-30.1 Mil.
Non Operating Income was 2.386 + -0.136 + 2.243 + 1.349 = $5.8 Mil.
Cash Flow from Operations was 35.688 + 5.804 + 22.971 + 14.379 = $78.8 Mil.
Accounts Receivable was $68.8 Mil.
Revenue was 129.418 + 131.723 + 137.762 + 132.094 = $531.0 Mil.
Gross Profit was 91.824 + 92.733 + 96.509 + 91.082 = $372.1 Mil.
Total Current Assets was $342.9 Mil.
Total Assets was $899.3 Mil.
Property, Plant and Equipment(Net PPE) was $43.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.5 Mil.
Selling, General & Admin. Expense(SGA) was $112.5 Mil.
Total Current Liabilities was $155.5 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)
=(58.752 / 508.028) / (68.773 / 530.997)
=0.11564717 / 0.12951674
=0.8929

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)
=(91.661 / 530.997) / (89.173 / 508.028)
=0.70084765 / 0.70628981
=0.9923

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 - (269.439 + 39.149) / 849.951) / (1 - (342.937 + 43.146) / 899.275)
=0.63693436 / 0.57067304
=1.1161

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
=508.028 / 530.997
=0.9567

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))
=(64.535 / (64.535 + 43.146)) / (71.432 / (71.432 + 39.149))
=0.5993165 / 0.64596992
=0.9278

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)
=(112.77 / 508.028) / (112.479 / 530.997)
=0.22197595 / 0.21182606
=1.0479

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 + 179.741) / 849.951) / ((0 + 155.505) / 899.275)
=0.21147219 / 0.17292263
=1.2229

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
=(-30.148 - 5.842 - 78.842) / 849.951
=-0.1351

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 -3.30 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 0.59341.36810.80020.94010.48391.01911.58070.60091.03821.2229
TATA -0.0222-0.029-0.1288-0.10680.0401-0.0645-0.0676-0.0801-0.4213-0.1376
M-score -1.83-2.581.42-2.93-2.11-2.47-2.60-2.82-4.47-3.31

PMC-Sierra, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.79590.88410.83190.9971.18231.26031.08771.03831.00430.8929
GMI 1.00891.00210.95960.95880.9670.96530.98340.98490.98470.9923
AQI 1.02491.01440.89461.03550.8770.85771.03530.87261.04961.1161
SGI 1.07421.03030.98320.91640.83830.81150.83320.86320.92280.9567
DEPI 0.97190.9771.08941.1811.27581.23631.15141.04330.9810.9278
SGAI 1.21031.10561.02971.06511.1011.16861.16361.13391.06781.0479
LVGI 0.96130.60090.89021.0291.48431.03821.00881.04350.68951.2229
TATA -0.097-0.0801-0.1264-0.1183-0.4209-0.4247-0.3655-0.3851-0.0853-0.1351
M-score -3.07-2.82-3.26-3.12-4.64-4.49-4.27-4.46-2.84-3.30
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