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GuruFocus has detected 4 Warning Signs with Qualcomm Inc $QCOM.
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Qualcomm Inc (NAS:QCOM)
Beneish M-Score
-1.97 (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.

Qualcomm Inc has a M-score of -2.00 signals that the company is a manipulator.

QCOM' s Beneish M-Score Range Over the Past 10 Years
Min: -4.32   Max: 1.17
Current: -1.97

-4.32
1.17

During the past 13 years, the highest Beneish M-Score of Qualcomm Inc was 1.17. The lowest was -4.32. And the median was -2.65.


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 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 * 1.5878+0.528 * 0.9905+0.404 * 1.201+0.892 * 0.9925+0.115 * 0.8993
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0329+4.679 * -0.0208-0.327 * 1.0452
=-2.00

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $2,085 Mil.
Revenue was 5999 + 6184 + 6044 + 5551 = $23,778 Mil.
Gross Profit was 3556 + 3645 + 3510 + 3410 = $14,121 Mil.
Total Current Assets was $15,779 Mil.
Total Assets was $52,366 Mil.
Property, Plant and Equipment(Net PPE) was $2,270 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,393 Mil.
Selling, General & Admin. Expense(SGA) was $2,398 Mil.
Total Current Liabilities was $7,994 Mil.
Long-Term Debt was $9,935 Mil.
Net Income was 682 + 1599 + 1444 + 1164 = $4,889 Mil.
Non Operating Income was 15 + -379 + 176 + 127 = $-61 Mil.
Cash Flow from Operations was 1379 + 2084 + 1840 + 737 = $6,040 Mil.
Accounts Receivable was $1,323 Mil.
Revenue was 5775 + 5456 + 5832 + 6894 = $23,957 Mil.
Gross Profit was 3241 + 3204 + 3381 + 4266 = $14,092 Mil.
Total Current Assets was $20,338 Mil.
Total Assets was $50,229 Mil.
Property, Plant and Equipment(Net PPE) was $2,484 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,291 Mil.
Selling, General & Admin. Expense(SGA) was $2,339 Mil.
Total Current Liabilities was $6,503 Mil.
Long-Term Debt was $9,950 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)
=(2085 / 23778) / (1323 / 23957)
=0.0876861 / 0.05522394
=1.5878

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)
=(14092 / 23957) / (14121 / 23778)
=0.58822056 / 0.59386828
=0.9905

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 - (15779 + 2270) / 52366) / (1 - (20338 + 2484) / 50229)
=0.65532979 / 0.54564096
=1.201

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
=23778 / 23957
=0.9925

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))
=(1291 / (1291 + 2484)) / (1393 / (1393 + 2270))
=0.34198675 / 0.38028938
=0.8993

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)
=(2398 / 23778) / (2339 / 23957)
=0.10084952 / 0.09763326
=1.0329

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)
=((9935 + 7994) / 52366) / ((9950 + 6503) / 50229)
=0.34237864 / 0.32755978
=1.0452

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
=(4889 - -61 - 6040) / 52366
=-0.0208

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 -2.00 signals that the company is likely to 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 local exchange's currency.

Qualcomm Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.86664.49640.18540.98910.99881.14931.12891.05710.85311.2127
GMI 1.01761.0060.99850.99311.03781.07161.03931.01431.0121.0058
AQI 0.97121.01951.04671.15491.031.0530.88520.96591.05681.0039
SGI 1.17871.2560.93481.05431.3621.27841.30051.06520.95450.9317
DEPI 0.8791.01280.82890.95880.71781.27580.94410.80170.97620.847
SGAI 1.12360.92490.96940.91620.95020.91290.8530.85381.07241.0921
LVGI 1.30570.7641.09891.7450.81190.84890.92911.08082.55551.0456
TATA -0.0381-0.001-0.1799-0.0362-0.0251-0.0179-0.0487-0.0323-0.0103-0.0328
M-score -2.761.06-4.16-2.79-2.21-2.02-2.30-2.55-3.20-2.54

Qualcomm Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.05711.59380.86820.93240.85310.66511.02661.14871.21271.5878
GMI 1.01421.00841.00331.00921.0121.00491.01421.00691.00570.9905
AQI 0.96590.95610.99880.94051.05681.14161.08431.18871.00391.201
SGI 1.06521.05871.06911.00920.95450.88850.82260.86080.93170.9925
DEPI 0.80170.9210.93320.97030.97620.92170.87930.83570.8470.8993
SGAI 0.85340.83180.86730.94681.07291.17061.30081.22151.09211.0329
LVGI 1.08081.15171.0612.45652.55552.47762.59971.08581.04561.0452
TATA -0.0298-0.02180.0064-0.002-0.0103-0.0219-0.0461-0.0345-0.0302-0.0208
M-score -2.54-2.03-2.51-3.03-3.20-3.45-3.38-2.63-2.53-2.00
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