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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 -1.80. The lowest was -3.59. And the median was -2.86.
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 * 0.9822||+||0.528 * 1.0766||+||0.404 * 1.0337||+||0.892 * 0.9342||+||0.115 * 0.8996|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0588||+||4.679 * -0.0881||-||0.327 * 0.9268|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $891 Mil.|
Revenue was 1613 + 1668 + 1764 + 1760 = $6,805 Mil.
Gross Profit was 538 + 558 + 613 + 430 = $2,139 Mil.
Total Current Assets was $4,800 Mil.
Total Assets was $8,381 Mil.
Property, Plant and Equipment(Net PPE) was $2,333 Mil.
Depreciation, Depletion and Amortization(DDA) was $745 Mil.
Selling, General & Admin. Expense(SGA) was $911 Mil.
Total Current Liabilities was $1,597 Mil.
Long-Term Debt was $1,428 Mil.
Net Income was -41 + 2 + 90 + 53 = $104 Mil.
Non Operating Income was 0 + 1 + -1 + 8 = $8 Mil.
Cash Flow from Operations was 141 + 245 + 57 + 391 = $834 Mil.
|Accounts Receivable was $971 Mil.
Revenue was 1705 + 1829 + 1886 + 1864 = $7,284 Mil.
Gross Profit was 566 + 619 + 646 + 634 = $2,465 Mil.
Total Current Assets was $4,989 Mil.
Total Assets was $8,712 Mil.
Property, Plant and Equipment(Net PPE) was $2,468 Mil.
Depreciation, Depletion and Amortization(DDA) was $687 Mil.
Selling, General & Admin. Expense(SGA) was $921 Mil.
Total Current Liabilities was $1,818 Mil.
Long-Term Debt was $1,575 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)|
|=||(891 / 6805)||/||(971 / 7284)|
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)|
|=||(2465 / 7284)||/||(2139 / 6805)|
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 - (4800 + 2333) / 8381)||/||(1 - (4989 + 2468) / 8712)|
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))|
|=||(687 / (687 + 2468))||/||(745 / (745 + 2333))|
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)|
|=||(911 / 6805)||/||(921 / 7284)|
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)|
|=||((1428 + 1597) / 8381)||/||((1575 + 1818) / 8712)|
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|
|=||(104 - 8||-||834)||/||8381|
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 -2.91 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