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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 -2.73.
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 * 0.8912||+||0.528 * 1.075||+||0.404 * 1.5982||+||0.892 * 0.8577||+||0.115 * 1.0393|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1347||+||4.679 * -0.1334||-||0.327 * 1.2163|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,398 Mil.|
Revenue was 2986 + 2925 + 2928 + 3330 = $12,169 Mil.
Gross Profit was 741 + 689 + 776 + 955 = $3,161 Mil.
Total Current Assets was $3,931 Mil.
Total Assets was $8,796 Mil.
Property, Plant and Equipment(Net PPE) was $2,230 Mil.
Depreciation, Depletion and Amortization(DDA) was $832 Mil.
Selling, General & Admin. Expense(SGA) was $764 Mil.
Total Current Liabilities was $2,539 Mil.
Long-Term Debt was $4,140 Mil.
Net Income was 165 + 34 + 137 + 291 = $627 Mil.
Non Operating Income was -2 + -9 + -5 + 8 = $-8 Mil.
Cash Flow from Operations was 382 + 824 + 228 + 374 = $1,808 Mil.
|Accounts Receivable was $1,829 Mil.
Revenue was 3696 + 3785 + 3301 + 3406 = $14,188 Mil.
Gross Profit was 1027 + 1051 + 925 + 959 = $3,962 Mil.
Total Current Assets was $6,632 Mil.
Total Assets was $10,814 Mil.
Property, Plant and Equipment(Net PPE) was $2,155 Mil.
Depreciation, Depletion and Amortization(DDA) was $848 Mil.
Selling, General & Admin. Expense(SGA) was $785 Mil.
Total Current Liabilities was $2,819 Mil.
Long-Term Debt was $3,932 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)|
|=||(1398 / 12169)||/||(1829 / 14188)|
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)|
|=||(689 / 14188)||/||(741 / 12169)|
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 - (3931 + 2230) / 8796)||/||(1 - (6632 + 2155) / 10814)|
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))|
|=||(848 / (848 + 2155))||/||(832 / (832 + 2230))|
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)|
|=||(764 / 12169)||/||(785 / 14188)|
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)|
|=||((4140 + 2539) / 8796)||/||((3932 + 2819) / 10814)|
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|
|=||(627 - -8||-||1808)||/||8796|
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 -3.14 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