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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 -3.06.
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 * 1.2261||+||0.528 * 0.9849||+||0.404 * 0.3865||+||0.892 * 1.1594||+||0.115 * 0.938|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.836||+||4.679 * -0.1162||-||0.327 * 0.9338|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $3,783 Mil.|
Revenue was 6937.92200724 + 6102.57135712 + 4876.19042763 + 4905.48901524 = $22,822 Mil.
Gross Profit was 3503.97809565 + 3040.77775925 + 2315.79263158 + 2196.21145241 = $11,057 Mil.
Total Current Assets was $15,805 Mil.
Total Assets was $44,804 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.
Net Income was 2533.44518934 + 1990.73971324 + 1574.69555921 + 1367.32685126 = $7,466 Mil.
Non Operating Income was 58.586240085 + 139.568222741 + 31.6566776316 + 108.952797497 = $339 Mil.
Cash Flow from Operations was 3028.27918091 + 2725.87072357 + 3120.42569079 + 3457.69488275 = $12,332 Mil.
|Accounts Receivable was $2,662 Mil.
Revenue was 5488.2028829 + 5208.65067326 + 4463.10290805 + 4525.19245998 = $19,685 Mil.
Gross Profit was 2663.16075347 + 2553.44936349 + 2043.0260548 + 2132.83935273 = $9,392 Mil.
Total Current Assets was $11,417 Mil.
Total Assets was $39,751 Mil.
Property, Plant and Equipment(Net PPE) was $24,566 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,111 Mil.
Selling, General & Admin. Expense(SGA) was $799 Mil.
Total Current Liabilities was $5,006 Mil.
Long-Term Debt was $7,130 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)|
|=||(3783.45999137 / 22822.1728072)||/||(2661.59366033 / 19685.1489242)|
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)|
|=||(3040.77775925 / 19685.1489242)||/||(3503.97809565 / 22822.1728072)|
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 - (15805.3233879 + 27357.5347317) / 44804.1830673)||/||(1 - (11417.1703406 + 24565.9124329) / 39750.8765149)|
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))|
|=||(5111.45326125 / (5111.45326125 + 24565.9124329))||/||(6153.07630748 / (6153.07630748 + 27357.5347317))|
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)|
|=||(774.670406281 / 22822.1728072)||/||(799.288693 / 19685.1489242)|
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)|
|=||((7056.20616641 + 5716.6428927) / 44804.1830673)||/||((7130.10721399 + 5005.71137292) / 39750.8765149)|
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|
|=||(7466.20731305 - 338.763937954||-||12332.270478)||/||44804.1830673|
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 -2.89 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