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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 -2.94 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 -5.93. 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 * 1.2382||+||0.528 * 1.1505||+||0.404 * 0.9676||+||0.892 * 0.8552||+||0.115 * 0.9456|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4683||+||4.679 * -0.1078||-||0.327 * 1.0862|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $1,745 Mil.|
Revenue was 3528 + 3489 + 3424 + 3526 = $13,967 Mil.
Gross Profit was 987 + 975 + 939 + 948 = $3,849 Mil.
Total Current Assets was $5,289 Mil.
Total Assets was $8,890 Mil.
Property, Plant and Equipment(Net PPE) was $2,128 Mil.
Depreciation, Depletion and Amortization(DDA) was $900 Mil.
Selling, General & Admin. Expense(SGA) was $717 Mil.
Total Current Liabilities was $2,457 Mil.
Long-Term Debt was $3,572 Mil.
Net Income was 428 + 427 + 348 + 416 = $1,619 Mil.
Non Operating Income was 46 + 1 + -95 + 16 = $-32 Mil.
Cash Flow from Operations was 856 + 682 + 388 + 683 = $2,609 Mil.
|Accounts Receivable was $1,648 Mil.
Revenue was 3668 + 3732 + 4482 + 4450 = $16,332 Mil.
Gross Profit was 992 + 1061 + 1484 + 1641 = $5,178 Mil.
Total Current Assets was $5,017 Mil.
Total Assets was $8,742 Mil.
Property, Plant and Equipment(Net PPE) was $2,228 Mil.
Depreciation, Depletion and Amortization(DDA) was $871 Mil.
Selling, General & Admin. Expense(SGA) was $571 Mil.
Total Current Liabilities was $2,643 Mil.
Long-Term Debt was $2,815 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)|
|=||(1745 / 13967)||/||(1648 / 16332)|
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)|
|=||(975 / 16332)||/||(987 / 13967)|
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 - (5289 + 2128) / 8890)||/||(1 - (5017 + 2228) / 8742)|
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))|
|=||(871 / (871 + 2228))||/||(900 / (900 + 2128))|
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)|
|=||(717 / 13967)||/||(571 / 16332)|
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)|
|=||((3572 + 2457) / 8890)||/||((2815 + 2643) / 8742)|
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|
|=||(1619 - -32||-||2609)||/||8890|
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 -2.94 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