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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 Seagate Technology PLC was 0.30. The lowest was -5.75. 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 Seagate Technology PLC 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 * 0.8721||+||0.528 * 1.1747||+||0.404 * 1.5456||+||0.892 * 0.8102||+||0.115 * 1.0056|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0538||+||4.679 * -0.1595||-||0.327 * 1.178|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,250 Mil.|
Revenue was 2595 + 2986 + 2925 + 2928 = $11,434 Mil.
Gross Profit was 524 + 741 + 689 + 776 = $2,730 Mil.
Total Current Assets was $3,600 Mil.
Total Assets was $8,374 Mil.
Property, Plant and Equipment(Net PPE) was $2,165 Mil.
Depreciation, Depletion and Amortization(DDA) was $827 Mil.
Selling, General & Admin. Expense(SGA) was $695 Mil.
Total Current Liabilities was $2,259 Mil.
Long-Term Debt was $4,130 Mil.
Net Income was -21 + 165 + 34 + 137 = $315 Mil.
Non Operating Income was 28 + -2 + -9 + -5 = $12 Mil.
Cash Flow from Operations was 205 + 382 + 824 + 228 = $1,639 Mil.
|Accounts Receivable was $1,769 Mil.
Revenue was 3330 + 3696 + 3785 + 3301 = $14,112 Mil.
Gross Profit was 955 + 1027 + 1051 + 925 = $3,958 Mil.
Total Current Assets was $5,831 Mil.
Total Assets was $10,036 Mil.
Property, Plant and Equipment(Net PPE) was $2,182 Mil.
Depreciation, Depletion and Amortization(DDA) was $840 Mil.
Selling, General & Admin. Expense(SGA) was $814 Mil.
Total Current Liabilities was $3,043 Mil.
Long-Term Debt was $3,457 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)|
|=||(1250 / 11434)||/||(1769 / 14112)|
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)|
|=||(3958 / 14112)||/||(2730 / 11434)|
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 - (3600 + 2165) / 8374)||/||(1 - (5831 + 2182) / 10036)|
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))|
|=||(840 / (840 + 2182))||/||(827 / (827 + 2165))|
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)|
|=||(695 / 11434)||/||(814 / 14112)|
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)|
|=||((4130 + 2259) / 8374)||/||((3457 + 3043) / 10036)|
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|
|=||(315 - 12||-||1639)||/||8374|
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.
Seagate Technology PLC has a M-score of -3.27 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
Seagate Technology PLC Annual Data
Seagate Technology PLC Quarterly Data