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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 -4.16. And the median was -2.59.
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 * 0.6651||+||0.528 * 1.0049||+||0.404 * 1.1416||+||0.892 * 0.8885||+||0.115 * 0.9217|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1786||+||4.679 * -0.0258||-||0.327 * 2.4776|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $2,355 Mil.
Total Current Liabilities was $6,503 Mil.
Long-Term Debt was $9,950 Mil.
Net Income was 1498 + 1062 + 1184 + 1053 = $4,797 Mil.
Non Operating Income was 99 + 54 + 67 + -6 = $214 Mil.
Cash Flow from Operations was 2739 + 1684 + 2116 + -658 = $5,881 Mil.
|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 $2,249 Mil.
Total Current Liabilities was $6,405 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)|
|=||(1323 / 23957)||/||(2239 / 26964)|
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)|
|=||(3204 / 26964)||/||(3241 / 23957)|
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 - (20338 + 2484) / 50229)||/||(1 - (22761 + 2531) / 48447)|
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))|
|=||(1165 / (1165 + 2531))||/||(1291 / (1291 + 2484))|
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)|
|=||(2355 / 23957)||/||(2249 / 26964)|
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)|
|=||((9950 + 6503) / 50229)||/||((0 + 6405) / 48447)|
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|
|=||(4797 - 214||-||5881)||/||50229|
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 -3.47 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