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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.
During the past 13 years, the highest Beneish M-Score of Qualcomm Inc was 1.06. The lowest was -4.24. And the median was -2.54.
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 Qualcomm 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 * 1.2127||+||0.528 * 1.0057||+||0.404 * 1.0039||+||0.892 * 0.9317||+||0.115 * 0.847|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0921||+||4.679 * -0.0328||-||0.327 * 1.0456|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2,219 Mil.|
Revenue was 6184 + 6044 + 5551 + 5775 = $23,554 Mil.
Gross Profit was 3645 + 3510 + 3410 + 3241 = $13,806 Mil.
Total Current Assets was $22,981 Mil.
Total Assets was $52,359 Mil.
Property, Plant and Equipment(Net PPE) was $2,306 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,428 Mil.
Selling, General & Admin. Expense(SGA) was $2,385 Mil.
Total Current Liabilities was $7,311 Mil.
Long-Term Debt was $10,008 Mil.
Net Income was 1599 + 1444 + 1164 + 1498 = $5,705 Mil.
Non Operating Income was -379 + 176 + 127 + 99 = $23 Mil.
Cash Flow from Operations was 2084 + 1840 + 737 + 2739 = $7,400 Mil.
|Accounts Receivable was $1,964 Mil.
Revenue was 5456 + 5832 + 6894 + 7099 = $25,281 Mil.
Gross Profit was 3204 + 3381 + 4266 + 4052 = $14,903 Mil.
Total Current Assets was $22,099 Mil.
Total Assets was $50,796 Mil.
Property, Plant and Equipment(Net PPE) was $2,534 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,214 Mil.
Selling, General & Admin. Expense(SGA) was $2,344 Mil.
Total Current Liabilities was $6,100 Mil.
Long-Term Debt was $9,969 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2219 / 23554)||/||(1964 / 25281)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(14903 / 25281)||/||(13806 / 23554)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (22981 + 2306) / 52359)||/||(1 - (22099 + 2534) / 50796)|
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.
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))|
|=||(1214 / (1214 + 2534))||/||(1428 / (1428 + 2306))|
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)|
|=||(2385 / 23554)||/||(2344 / 25281)|
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)|
|=||((10008 + 7311) / 52359)||/||((9969 + 6100) / 50796)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(5705 - 23||-||7400)||/||52359|
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.
Qualcomm Inc has a M-score of -2.54 suggests that the company will not be a manipulator.
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
Qualcomm Inc Annual Data
Qualcomm Inc Quarterly Data