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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 -3.00.
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 * 0.9723||+||0.528 * 0.9536||+||0.404 * 0.3866||+||0.892 * 1.3283||+||0.115 * 0.7791|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7499||+||4.679 * -0.133||-||0.327 * 0.8656|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $3,134 Mil.|
Revenue was 7061.93729285 + 7098.01217789 + 6937.92200724 + 6102.57135712 = $27,200 Mil.
Gross Profit was 3480.77383565 + 3526.12170235 + 3503.97809565 + 3040.77775925 = $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.
Net Income was 2512.54559739 + 2245.25894762 + 2533.44518934 + 1990.73971324 = $9,282 Mil.
Non Operating Income was 77.1926827872 + -26.1028837168 + 58.586240085 + 139.568222741 = $249 Mil.
Cash Flow from Operations was 4962.13717706 + 4901.41956309 + 3028.27918091 + 2725.87072357 = $15,618 Mil.
|Accounts Receivable was $2,427 Mil.
Revenue was 4876.19042763 + 4906.22692864 + 5486.5231408 + 5208.65067326 = $20,478 Mil.
Gross Profit was 2315.69092105 + 2196.21145241 + 2663.16075347 + 2553.44936349 = $9,729 Mil.
Total Current Assets was $11,707 Mil.
Total Assets was $42,719 Mil.
Property, Plant and Equipment(Net PPE) was $27,237 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,392 Mil.
Selling, General & Admin. Expense(SGA) was $784 Mil.
Total Current Liabilities was $5,737 Mil.
Long-Term Debt was $6,994 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)|
|=||(3134.07717363 / 27200.4428351)||/||(2426.77809211 / 20477.5911703)|
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)|
|=||(3526.12170235 / 20477.5911703)||/||(3480.77383565 / 27200.4428351)|
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 - (21963.525011 + 25867.2533415) / 49522.3980699)||/||(1 - (11706.9216118 + 27237.2230263) / 42718.7649671)|
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))|
|=||(5391.62862076 / (5391.62862076 + 27237.2230263))||/||(6963.57640505 / (6963.57640505 + 25867.2533415))|
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)|
|=||(781.318391936 / 27200.4428351)||/||(784.370893343 / 20477.5911703)|
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)|
|=||((6808.54447774 + 5966.15407371) / 49522.3980699)||/||((6994.12421053 + 5736.74881579) / 42718.7649671)|
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|
|=||(9281.9894476 - 249.244261896||-||15617.7066446)||/||49522.3980699|
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 -3.05 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