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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 -5.41. And the median was -2.83.
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 * 0.9352||+||0.528 * 1.1827||+||0.404 * 1.5273||+||0.892 * 0.8123||+||0.115 * 0.9843|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9147||+||4.679 * -0.1757||-||0.327 * 1.1712|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,318 Mil.|
Revenue was 2654 + 2595 + 2986 + 2925 = $11,160 Mil.
Gross Profit was 662 + 524 + 741 + 689 = $2,616 Mil.
Total Current Assets was $3,533 Mil.
Total Assets was $8,252 Mil.
Property, Plant and Equipment(Net PPE) was $2,160 Mil.
Depreciation, Depletion and Amortization(DDA) was $815 Mil.
Selling, General & Admin. Expense(SGA) was $636 Mil.
Total Current Liabilities was $2,249 Mil.
Long-Term Debt was $4,130 Mil.
Net Income was 70 + -21 + 165 + 34 = $248 Mil.
Non Operating Income was 1 + 28 + -2 + -9 = $18 Mil.
Cash Flow from Operations was 269 + 205 + 382 + 824 = $1,680 Mil.
|Accounts Receivable was $1,735 Mil.
Revenue was 2928 + 3330 + 3696 + 3785 = $13,739 Mil.
Gross Profit was 776 + 955 + 1027 + 1051 = $3,809 Mil.
Total Current Assets was $5,568 Mil.
Total Assets was $9,845 Mil.
Property, Plant and Equipment(Net PPE) was $2,278 Mil.
Depreciation, Depletion and Amortization(DDA) was $841 Mil.
Selling, General & Admin. Expense(SGA) was $856 Mil.
Total Current Liabilities was $2,343 Mil.
Long-Term Debt was $4,155 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)|
|=||(1318 / 11160)||/||(1735 / 13739)|
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)|
|=||(3809 / 13739)||/||(2616 / 11160)|
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 - (3533 + 2160) / 8252)||/||(1 - (5568 + 2278) / 9845)|
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))|
|=||(841 / (841 + 2278))||/||(815 / (815 + 2160))|
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)|
|=||(636 / 11160)||/||(856 / 13739)|
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 + 2249) / 8252)||/||((4155 + 2343) / 9845)|
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|
|=||(248 - 18||-||1680)||/||8252|
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 -3.26 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