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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 STMicroelectronics NV was -2.00. The lowest was -3.56. And the median was -2.76.
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 * 1.8893||+||0.528 * 0.9498||+||0.404 * 1.1025||+||0.892 * 0.4597||+||0.115 * 0.8389|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9429||+||4.679 * -0.0683||-||0.327 * 1.1745|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $911 Mil.|
Revenue was 1829 + 1886 + 0 + 0 = $3,715 Mil.
Gross Profit was 619 + 646 + 0 + 0 = $1,265 Mil.
Total Current Assets was $5,051 Mil.
Total Assets was $9,008 Mil.
Property, Plant and Equipment(Net PPE) was $2,647 Mil.
Depreciation, Depletion and Amortization(DDA) was $811 Mil.
Selling, General & Admin. Expense(SGA) was $462 Mil.
Total Current Liabilities was $1,766 Mil.
Long-Term Debt was $1,603 Mil.
Net Income was 43 + 72 + 0 + 0 = $115 Mil.
Non Operating Income was 15 + 0 + 0 + 0 = $15 Mil.
Cash Flow from Operations was 311 + 89 + 262 + 53 = $715 Mil.
|Accounts Receivable was $1,049 Mil.
Revenue was 2015 + 2013 + 2045 + 2009 = $8,082 Mil.
Gross Profit was 662 + 652 + 672 + 628 = $2,614 Mil.
Total Current Assets was $4,807 Mil.
Total Assets was $9,173 Mil.
Property, Plant and Equipment(Net PPE) was $3,156 Mil.
Depreciation, Depletion and Amortization(DDA) was $773 Mil.
Selling, General & Admin. Expense(SGA) was $1,066 Mil.
Total Current Liabilities was $1,993 Mil.
Long-Term Debt was $928 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)|
|=||(911 / 3715)||/||(1049 / 8082)|
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)|
|=||(646 / 8082)||/||(619 / 3715)|
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 - (5051 + 2647) / 9008)||/||(1 - (4807 + 3156) / 9173)|
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))|
|=||(773 / (773 + 3156))||/||(811 / (811 + 2647))|
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)|
|=||(462 / 3715)||/||(1066 / 8082)|
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)|
|=||((1603 + 1766) / 9008)||/||((928 + 1993) / 9173)|
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|
|=||(115 - 15||-||715)||/||9008|
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 -2.51 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
STMicroelectronics NV Annual Data
STMicroelectronics NV Quarterly Data