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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 -1.89. The lowest was -3.56. And the median was -2.85.
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 * 1.8683||+||0.528 * 0.9604||+||0.404 * 0.856||+||0.892 * 0.4741||+||0.115 * 0.8842|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9051||+||4.679 * -0.0666||-||0.327 * 1.2931|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,046 Mil.|
Revenue was 1886 + 0 + 0 + 2015 = $3,901 Mil.
Gross Profit was 646 + 0 + 0 + 662 = $1,308 Mil.
Total Current Assets was $5,476 Mil.
Total Assets was $9,411 Mil.
Property, Plant and Equipment(Net PPE) was $2,785 Mil.
Depreciation, Depletion and Amortization(DDA) was $837 Mil.
Selling, General & Admin. Expense(SGA) was $475 Mil.
Total Current Liabilities was $1,781 Mil.
Long-Term Debt was $1,743 Mil.
Net Income was 72 + 0 + 0 + -36 = $36 Mil.
Non Operating Income was 0 + 0 + 0 + -11 = $-11 Mil.
Cash Flow from Operations was 89 + 262 + 53 + 270 = $674 Mil.
|Accounts Receivable was $1,181 Mil.
Revenue was 2013 + 2045 + 2009 + 2162 = $8,229 Mil.
Gross Profit was 652 + 672 + 628 + 698 = $2,650 Mil.
Total Current Assets was $4,800 Mil.
Total Assets was $9,324 Mil.
Property, Plant and Equipment(Net PPE) was $3,193 Mil.
Depreciation, Depletion and Amortization(DDA) was $820 Mil.
Selling, General & Admin. Expense(SGA) was $1,107 Mil.
Total Current Liabilities was $2,081 Mil.
Long-Term Debt was $619 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)|
|=||(1046 / 3901)||/||(1181 / 8229)|
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)|
|=||(0 / 8229)||/||(646 / 3901)|
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 - (5476 + 2785) / 9411)||/||(1 - (4800 + 3193) / 9324)|
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))|
|=||(820 / (820 + 3193))||/||(837 / (837 + 2785))|
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)|
|=||(475 / 3901)||/||(1107 / 8229)|
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)|
|=||((1743 + 1781) / 9411)||/||((619 + 2081) / 9324)|
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|
|=||(36 - -11||-||674)||/||9411|
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 -2.63 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