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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 -2.87.
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 * 1.0619||+||0.528 * 1.0403||+||0.404 * 1.123||+||0.892 * 0.9608||+||0.115 * 0.9668|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0662||+||4.679 * -0.1007||-||0.327 * 0.9517|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,009 Mil.|
Revenue was 1797 + 1703 + 1613 + 1668 = $6,781 Mil.
Gross Profit was 643 + 471 + 538 + 558 = $2,210 Mil.
Total Current Assets was $4,725 Mil.
Total Assets was $8,278 Mil.
Property, Plant and Equipment(Net PPE) was $2,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $729 Mil.
Selling, General & Admin. Expense(SGA) was $924 Mil.
Total Current Liabilities was $1,676 Mil.
Long-Term Debt was $1,436 Mil.
Net Income was 71 + 50 + -41 + 2 = $82 Mil.
Non Operating Income was -1 + 9 + 0 + 1 = $9 Mil.
Cash Flow from Operations was 198 + 323 + 141 + 245 = $907 Mil.
|Accounts Receivable was $989 Mil.
Revenue was 1764 + 1760 + 1705 + 1829 = $7,058 Mil.
Gross Profit was 613 + 595 + 566 + 619 = $2,393 Mil.
Total Current Assets was $5,073 Mil.
Total Assets was $8,686 Mil.
Property, Plant and Equipment(Net PPE) was $2,432 Mil.
Depreciation, Depletion and Amortization(DDA) was $741 Mil.
Selling, General & Admin. Expense(SGA) was $902 Mil.
Total Current Liabilities was $1,874 Mil.
Long-Term Debt was $1,557 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)|
|=||(1009 / 6781)||/||(989 / 7058)|
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)|
|=||(2393 / 7058)||/||(2210 / 6781)|
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 - (4725 + 2289) / 8278)||/||(1 - (5073 + 2432) / 8686)|
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))|
|=||(741 / (741 + 2432))||/||(729 / (729 + 2289))|
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)|
|=||(924 / 6781)||/||(902 / 7058)|
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)|
|=||((1436 + 1676) / 8278)||/||((1557 + 1874) / 8686)|
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|
|=||(82 - 9||-||907)||/||8278|
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 -2.86 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