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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 -2.05. The lowest was -3.43. And the median was -2.82.
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|
|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
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)|
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)|
|=||(2332 / 6897)||/||(2349 / 6973)|
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 - (4482 + 2287) / 8008)||/||(1 - (4680 + 2321) / 8195)|
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))|
|=||(736 / (736 + 2321))||/||(696 / (696 + 2287))|
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)|
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)|
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|
|=||(192 - 7||-||1039)||/||8008|
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.
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