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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 -2.57.
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 * 1.5938||+||0.528 * 1.0084||+||0.404 * 0.9561||+||0.892 * 1.0587||+||0.115 * 0.921|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8259||+||4.679 * -0.0335||-||0.327 * 1.1517|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,239 Mil.|
Revenue was 7099 + 6692 + 6806 + 6367 = $26,964 Mil.
Gross Profit was 4052 + 3935 + 4066 + 3885 = $15,938 Mil.
Total Current Assets was $22,761 Mil.
Total Assets was $48,447 Mil.
Property, Plant and Equipment(Net PPE) was $2,531 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,165 Mil.
Selling, General & Admin. Expense(SGA) was $2,233 Mil.
Total Current Liabilities was $6,405 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1972 + 1894 + 2238 + 1959 = $8,063 Mil.
Non Operating Income was 101 + 716 + 283 + 118 = $1,218 Mil.
Cash Flow from Operations was 2364 + 1619 + 2673 + 1814 = $8,470 Mil.
|Accounts Receivable was $1,327 Mil.
Revenue was 6622 + 6481 + 6243 + 6124 = $25,470 Mil.
Gross Profit was 3916 + 3767 + 3746 + 3752 = $15,181 Mil.
Total Current Assets was $20,585 Mil.
Total Assets was $46,282 Mil.
Property, Plant and Equipment(Net PPE) was $2,562 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,048 Mil.
Selling, General & Admin. Expense(SGA) was $2,554 Mil.
Total Current Liabilities was $5,313 Mil.
Long-Term Debt was $0 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)|
|=||(2239 / 26964)||/||(1327 / 25470)|
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)|
|=||(3935 / 25470)||/||(4052 / 26964)|
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 - (22761 + 2531) / 48447)||/||(1 - (20585 + 2562) / 46282)|
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))|
|=||(1048 / (1048 + 2562))||/||(1165 / (1165 + 2531))|
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)|
|=||(2233 / 26964)||/||(2554 / 25470)|
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 + 6405) / 48447)||/||((0 + 5313) / 46282)|
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|
|=||(8063 - 1218||-||8470)||/||48447|
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 -2.08 signals that the company is likely to 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