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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 Taiwan Semiconductor Manufacturing Co Ltd was 33915.64. The lowest was -4.64. And the median was -3.01.
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 Taiwan Semiconductor Manufacturing Co Ltd 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 * 1.01||+||0.528 * 1.0474||+||0.404 * 1.1823||+||0.892 * 0.9413||+||0.115 * 1.0067|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9472||+||4.679 * -0.1383||-||0.327 * 0.9365|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,980 Mil.|
Revenue was 6244.60254577 + 6207.09336546 + 6504.68813419 + 6648.92297933 = $25,605 Mil.
Gross Profit was 2802.84950625 + 3016.87757125 + 3132.45553192 + 3226.8855791 = $12,179 Mil.
Total Current Assets was $24,933 Mil.
Total Assets was $52,981 Mil.
Property, Plant and Equipment(Net PPE) was $25,909 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,916 Mil.
Selling, General & Admin. Expense(SGA) was $697 Mil.
Total Current Liabilities was $7,239 Mil.
Long-Term Debt was $5,560 Mil.
Net Income was 1987.93070328 + 2107.75227581 + 2305.79666049 + 2570.29581011 = $8,972 Mil.
Non Operating Income was 80.9872834286 + -17.70820817 + 177.49387043 + 707.032319035 = $948 Mil.
Cash Flow from Operations was 3729.32032012 + 4412.01408945 + 3616.19978879 + 3594.61560868 = $15,352 Mil.
|Accounts Receivable was $3,134 Mil.
Revenue was 7062.55905236 + 7098.44092384 + 6938.02840928 + 6102.71703901 = $27,202 Mil.
Gross Profit was 3480.77383565 + 3526.41763338 + 3503.87547708 + 3040.67459153 = $13,552 Mil.
Total Current Assets was $21,964 Mil.
Total Assets was $49,522 Mil.
Property, Plant and Equipment(Net PPE) was $25,867 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,964 Mil.
Selling, General & Admin. Expense(SGA) was $781 Mil.
Total Current Liabilities was $5,966 Mil.
Long-Term Debt was $6,809 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)|
|=||(2979.62086573 / 25605.3070248)||/||(3134.07717363 / 27201.7454245)|
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)|
|=||(3016.87757125 / 27201.7454245)||/||(2802.84950625 / 25605.3070248)|
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 - (24932.676648 + 25908.9540743) / 52981.3865482)||/||(1 - (21963.525011 + 25867.2533415) / 49522.3980699)|
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))|
|=||(6963.57640505 / (6963.57640505 + 25867.2533415))||/||(6915.90481757 / (6915.90481757 + 25908.9540743))|
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)|
|=||(696.624015514 / 25605.3070248)||/||(781.307201851 / 27201.7454245)|
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)|
|=||((5559.85006475 + 7238.78624867) / 52981.3865482)||/||((6808.54447774 + 5966.15407371) / 49522.3980699)|
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|
|=||(8971.7754497 - 947.805264723||-||15352.149807)||/||52981.3865482|
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.
Taiwan Semiconductor Manufacturing Co Ltd has a M-score of -3.04 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
Taiwan Semiconductor Manufacturing Co Ltd Annual Data
Taiwan Semiconductor Manufacturing Co Ltd Quarterly Data