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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 33918.27. The lowest was -4.64. And the median was -3.03.
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 * 0.6531||+||0.528 * 0.9899||+||0.404 * 0.8974||+||0.892 * 1.1968||+||0.115 * 0.8459|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7861||+||4.679 * -0.1736||-||0.327 * 0.8761|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,957 Mil.|
Revenue was 6504.68813419 + 6648.92297933 + 7061.93729285 + 7098.44092384 = $27,314 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.
Net Income was 2305.79666049 + 2570.29581011 + 2512.54559739 + 2245.63898839 = $9,634 Mil.
Non Operating Income was 177.49387043 + 707.032319035 + 77.1926827872 + -26.1228506087 = $936 Mil.
Cash Flow from Operations was 3616.19978879 + 3594.61560868 + 4962.13717706 + 4901.41956309 = $17,074 Mil.
|Accounts Receivable was $3,783 Mil.
Revenue was 6938.02840928 + 6102.71703901 + 4876.19042763 + 4906.22692864 = $22,823 Mil.
Gross Profit was 3503.87547708 + 3040.67459153 + 2315.69092105 + 2196.21145241 = $11,056 Mil.
Total Current Assets was $15,805 Mil.
Total Assets was $44,801 Mil.
Property, Plant and Equipment(Net PPE) was $27,358 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,153 Mil.
Selling, General & Admin. Expense(SGA) was $775 Mil.
Total Current Liabilities was $5,717 Mil.
Long-Term Debt was $7,056 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)|
|=||(2957.24244326 / 27313.9893302)||/||(3783.45999137 / 22823.1628046)|
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)|
|=||(3226.8855791 / 22823.1628046)||/||(3132.45553192 / 27313.9893302)|
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 - (21232.6939806 + 25431.2159354) / 48247.4115)||/||(1 - (15805.3233879 + 27357.5347317) / 44801.2860509)|
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))|
|=||(6153.07630748 / (6153.07630748 + 27357.5347317))||/||(7050.6866807 / (7050.6866807 + 25431.2159354))|
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)|
|=||(728.82337734 / 27313.9893302)||/||(774.708719543 / 22823.1628046)|
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)|
|=||((5877.21740461 + 6173.62891994) / 48247.4115)||/||((7056.20616641 + 5716.6428927) / 44801.2860509)|
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|
|=||(9634.27705639 - 935.596021643||-||17074.3721376)||/||48247.4115|
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 -3.42 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