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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.
Seagate Technology PLC has a M-score of -2.73 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Seagate Technology PLC was 0.30. The lowest was -4.10. And the median was -2.65.
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 * 1.1872||+||0.528 * 0.9766||+||0.404 * 1.2647||+||0.892 * 0.9938||+||0.115 * 1.0061|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1437||+||4.679 * -0.0931||-||0.327 * 1.1596|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,909 Mil.|
Revenue was 3785 + 3301 + 3406 + 3528 = $14,020 Mil.
Gross Profit was 1051 + 925 + 959 + 987 = $3,922 Mil.
Total Current Assets was $5,583 Mil.
Total Assets was $9,765 Mil.
Property, Plant and Equipment(Net PPE) was $2,156 Mil.
Depreciation, Depletion and Amortization(DDA) was $869 Mil.
Selling, General & Admin. Expense(SGA) was $757 Mil.
Total Current Liabilities was $2,596 Mil.
Long-Term Debt was $3,809 Mil.
Net Income was 381 + 320 + 395 + 428 = $1,524 Mil.
Non Operating Income was -11 + -77 + -3 + 46 = $-45 Mil.
Cash Flow from Operations was 602 + 577 + 443 + 856 = $2,478 Mil.
|Accounts Receivable was $1,618 Mil.
Revenue was 3489 + 3424 + 3526 + 3668 = $14,107 Mil.
Gross Profit was 975 + 939 + 948 + 992 = $3,854 Mil.
Total Current Assets was $5,625 Mil.
Total Assets was $9,345 Mil.
Property, Plant and Equipment(Net PPE) was $2,187 Mil.
Depreciation, Depletion and Amortization(DDA) was $889 Mil.
Selling, General & Admin. Expense(SGA) was $666 Mil.
Total Current Liabilities was $2,514 Mil.
Long-Term Debt was $2,772 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)|
|=||(1909 / 14020)||/||(1618 / 14107)|
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)|
|=||(925 / 14107)||/||(1051 / 14020)|
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 - (5583 + 2156) / 9765)||/||(1 - (5625 + 2187) / 9345)|
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))|
|=||(889 / (889 + 2187))||/||(869 / (869 + 2156))|
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)|
|=||(757 / 14020)||/||(666 / 14107)|
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)|
|=||((3809 + 2596) / 9765)||/||((2772 + 2514) / 9345)|
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|
|=||(1524 - -45||-||2478)||/||9765|
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 -2.73 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