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GuruFocus has detected 6 Warning Signs with STMicroelectronics NV $STM.
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STMicroelectronics NV (NYSE:STM)
Beneish M-Score
-2.76 (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.

STMicroelectronics NV has a M-score of -2.82 suggests that the company is not a manipulator.

STM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: -2.05
Current: -2.76

-3.43
-2.05

During the past 13 years, the highest Beneish M-Score of STMicroelectronics NV was -2.05. The lowest was -3.43. And the median was -2.82.


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 STMicroelectronics NV 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 * 1.1326+0.528 * 1.0037+0.404 * 1.0619+0.892 * 1.011+0.115 * 1.0319
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0178+4.679 * -0.1066-0.327 * 1.0031
=-2.82

* 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 $939 Mil.
Revenue was 1860 + 1797 + 1703 + 1613 = $6,973 Mil.
Gross Profit was 697 + 643 + 471 + 538 = $2,349 Mil.
Total Current Assets was $4,482 Mil.
Total Assets was $8,008 Mil.
Property, Plant and Equipment(Net PPE) was $2,287 Mil.
Depreciation, Depletion and Amortization(DDA) was $696 Mil.
Selling, General & Admin. Expense(SGA) was $923 Mil.
Total Current Liabilities was $1,588 Mil.
Long-Term Debt was $1,334 Mil.
Net Income was 112 + 71 + 50 + -41 = $192 Mil.
Non Operating Income was -1 + -1 + 9 + 0 = $7 Mil.
Cash Flow from Operations was 377 + 198 + 323 + 141 = $1,039 Mil.
Accounts Receivable was $820 Mil.
Revenue was 1668 + 1764 + 1760 + 1705 = $6,897 Mil.
Gross Profit was 558 + 613 + 595 + 566 = $2,332 Mil.
Total Current Assets was $4,680 Mil.
Total Assets was $8,195 Mil.
Property, Plant and Equipment(Net PPE) was $2,321 Mil.
Depreciation, Depletion and Amortization(DDA) was $736 Mil.
Selling, General & Admin. Expense(SGA) was $897 Mil.
Total Current Liabilities was $1,560 Mil.
Long-Term Debt was $1,421 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)
=(939 / 6973) / (820 / 6897)
=0.13466227 / 0.11889227
=1.1326

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)
=(2332 / 6897) / (2349 / 6973)
=0.33811802 / 0.33687079
=1.0037

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 - (4482 + 2287) / 8008) / (1 - (4680 + 2321) / 8195)
=0.15472028 / 0.1456986
=1.0619

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
=6973 / 6897
=1.011

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))
=(736 / (736 + 2321)) / (696 / (696 + 2287))
=0.24075891 / 0.23332216
=1.0319

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)
=(923 / 6973) / (897 / 6897)
=0.1323677 / 0.13005655
=1.0178

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)
=((1334 + 1588) / 8008) / ((1421 + 1560) / 8195)
=0.36488511 / 0.36375839
=1.0031

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
=(192 - 7 - 1039) / 8008
=-0.1066

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.

STMicroelectronics NV has a M-score of -2.82 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 local exchange's currency.

STMicroelectronics NV Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99520.67361.48590.74010.90381.10131.09690.9480.96631.1326
GMI 1.01120.97751.17220.79521.0571.12041.01310.95870.99780.9604
AQI 1.31362.4060.8960.8561.05930.64840.94851.09961.00451.0619
SGI 1.01490.98410.86471.21570.94090.87240.95160.91610.93151.011
DEPI 0.9930.9780.89171.06960.95361.01961.07810.95430.97411.0319
SGAI 1.01491.09751.12920.83391.09441.10460.96070.94921.03881.0045
LVGI 1.05441.16720.98130.92860.89821.10141.02991.17360.97331.0031
TATA -0.1845-0.1317-0.1073-0.0885-0.0451-0.1676-0.0811-0.0603-0.0903-0.11
M-score -3.22-2.93-2.64-3.05-2.77-3.41-2.82-2.92-2.99-2.86

STMicroelectronics NV Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.96030.9480.94680.96221.01680.96630.98220.9591.06191.1326
GMI 0.96190.95870.96720.97680.98740.99780.99951.04591.04031.0037
AQI 0.8561.09961.03830.99491.11271.00451.03371.02471.1231.0619
SGI 0.92230.91610.92230.93040.92990.93150.93420.93980.96081.011
DEPI 1.09611.04921.02141.08360.90080.88530.89960.78980.96681.0319
SGAI 0.92060.94920.98391.01141.03191.03881.05061.07341.06621.0178
LVGI 1.29311.17361.24621.29831.05490.97330.92680.89730.95171.0031
TATA -0.0115-0.039-0.0523-0.0673-0.0897-0.0903-0.0891-0.0922-0.1007-0.1066
M-score -2.79-2.81-2.92-3.00-2.94-3.01-2.95-2.97-2.86-2.82
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