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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 114774.86. 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 * 1.3826||+||0.528 * 0.971||+||0.404 * 1.0877||+||0.892 * 1.1196||+||0.115 * 1.1547|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9973||+||4.679 * -0.1159||-||0.327 * 1.0204|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $4,045 Mil.|
Revenue was 8194.44349307 + 8278.73684679 + 6867.17789474 + 6244.60254577 = $29,585 Mil.
Gross Profit was 4284.6048343 + 4197.92565536 + 3539.75962848 + 2802.84950625 = $14,825 Mil.
Total Current Assets was $25,554 Mil.
Total Assets was $58,946 Mil.
Property, Plant and Equipment(Net PPE) was $31,180 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,978 Mil.
Selling, General & Admin. Expense(SGA) was $802 Mil.
Total Current Liabilities was $10,884 Mil.
Long-Term Debt was $4,785 Mil.
Net Income was 3052.04074936 + 3075.99315874 + 2244.77773994 + 1987.93070328 = $10,361 Mil.
Non Operating Income was 91.0504523367 + 89.3356476625 + 89.9942724458 + 80.9872834286 = $351 Mil.
Cash Flow from Operations was 5788.02821831 + 4018.58962621 + 3302.67464396 + 3729.32032012 = $16,839 Mil.
|Accounts Receivable was $2,613 Mil.
Revenue was 6207.07095043 + 6505.2780116 + 6648.92297933 + 7062.55905236 = $26,424 Mil.
Gross Profit was 3016.87757125 + 3132.45553192 + 3226.8855791 + 3480.77383565 = $12,857 Mil.
Total Current Assets was $22,773 Mil.
Total Assets was $50,545 Mil.
Property, Plant and Equipment(Net PPE) was $26,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,967 Mil.
Selling, General & Admin. Expense(SGA) was $718 Mil.
Total Current Liabilities was $7,312 Mil.
Long-Term Debt was $5,855 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)|
|=||(4045.2992922 / 29584.9607804)||/||(2613.26908708 / 26423.8309937)|
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)|
|=||(12856.9925179 / 26423.8309937)||/||(14825.1396244 / 29584.9607804)|
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 - (25553.6350995 + 31180.0659365) / 58945.8508461)||/||(1 - (22773.1812568 + 26027.9745658) / 50545.0481084)|
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))|
|=||(6966.81074589 / (6966.81074589 + 26027.9745658))||/||(6977.50664441 / (6977.50664441 + 31180.0659365))|
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)|
|=||(802.118795389 / 29584.9607804)||/||(718.333622323 / 26423.8309937)|
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)|
|=||((4784.78148779 + 10883.7674411) / 58945.8508461)||/||((5855.28125524 + 7312.24287522) / 50545.0481084)|
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|
|=||(10360.7423513 - 351.367655874||-||16838.6128086)||/||58945.8508461|
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 -2.53 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