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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 114774.83. The lowest was -4.48. And the median was -2.91.
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 * 1.3682||+||0.528 * 0.9961||+||0.404 * 1.3148||+||0.892 * 1.0103||+||0.115 * 1.1481|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0128||+||4.679 * -0.1151||-||0.327 * 0.9544|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $4,115 Mil.|
Revenue was 8278.73684679 + 6867.17789474 + 6244.60254577 + 6207.07095043 = $27,598 Mil.
Gross Profit was 4197.92565536 + 3539.75962848 + 2802.84950625 + 3016.87757125 = $13,557 Mil.
Total Current Assets was $22,558 Mil.
Total Assets was $54,637 Mil.
Property, Plant and Equipment(Net PPE) was $29,722 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,929 Mil.
Selling, General & Admin. Expense(SGA) was $746 Mil.
Total Current Liabilities was $8,188 Mil.
Long-Term Debt was $4,837 Mil.
Net Income was 3075.99315874 + 2244.77773994 + 1987.93070328 + 2107.75227581 = $9,416 Mil.
Non Operating Income was 89.3356476625 + 89.9942724458 + 80.9872834286 + -17.70820817 = $243 Mil.
Cash Flow from Operations was 4018.58962621 + 3302.67464396 + 3729.32032012 + 4412.01408945 = $15,463 Mil.
|Accounts Receivable was $2,977 Mil.
Revenue was 6505.2780116 + 6648.92297933 + 7062.55905236 + 7098.44092384 = $27,315 Mil.
Gross Profit was 3132.45553192 + 3226.8855791 + 3480.77383565 + 3526.41763338 = $13,367 Mil.
Total Current Assets was $21,233 Mil.
Total Assets was $48,247 Mil.
Property, Plant and Equipment(Net PPE) was $25,431 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,051 Mil.
Selling, General & Admin. Expense(SGA) was $729 Mil.
Total Current Liabilities was $6,174 Mil.
Long-Term Debt was $5,877 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)|
|=||(4114.87865667 / 27597.5882377)||/||(2976.81721483 / 27315.2009671)|
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)|
|=||(13366.53258 / 27315.2009671)||/||(13557.4123613 / 27597.5882377)|
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 - (22558.0802831 + 29721.5967917) / 54637.4566222)||/||(1 - (21232.6939806 + 25431.2159354) / 48247.4115)|
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))|
|=||(7050.6866807 / (7050.6866807 + 25431.2159354))||/||(6929.47497614 / (6929.47497614 + 29721.5967917))|
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)|
|=||(745.819343805 / 27597.5882377)||/||(728.82337734 / 27315.2009671)|
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)|
|=||((4837.30282107 + 8187.73761611) / 54637.4566222)||/||((5877.21740461 + 6173.62891994) / 48247.4115)|
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|
|=||(9416.45387777 - 242.608995367||-||15462.5986797)||/||54637.4566222|
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 -2.52 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