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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 3443.25. The lowest was -4.64. And the median was -3.01.
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 * 1.1271||+||0.528 * 1.0235||+||0.404 * 1.4199||+||0.892 * 0.9306||+||0.115 * 1.0471|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9904||+||4.679 * -0.1207||-||0.327 * 1.01|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $3,507 Mil.|
Revenue was 6867.17789474 + 6244.60254577 + 6207.09336546 + 6504.68813419 = $25,824 Mil.
Gross Profit was 3539.75962848 + 2802.84950625 + 3016.87757125 + 3132.45553192 = $12,492 Mil.
Total Current Assets was $26,394 Mil.
Total Assets was $55,867 Mil.
Property, Plant and Equipment(Net PPE) was $27,117 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,859 Mil.
Selling, General & Admin. Expense(SGA) was $693 Mil.
Total Current Liabilities was $12,345 Mil.
Long-Term Debt was $5,613 Mil.
Net Income was 2244.77773994 + 1987.93070328 + 2107.75227581 + 2305.79666049 = $8,646 Mil.
Non Operating Income was 89.9942724458 + 80.9872834286 + -17.70820817 + 177.49387043 = $331 Mil.
Cash Flow from Operations was 3302.67464396 + 3729.32032012 + 4412.01408945 + 3616.19978879 = $15,060 Mil.
|Accounts Receivable was $3,343 Mil.
Revenue was 6648.92297933 + 7062.55905236 + 7098.44092384 + 6938.02840928 = $27,748 Mil.
Gross Profit was 3226.8855791 + 3480.77383565 + 3526.41763338 + 3503.87547708 = $13,738 Mil.
Total Current Assets was $23,670 Mil.
Total Assets was $52,069 Mil.
Property, Plant and Equipment(Net PPE) was $26,853 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,198 Mil.
Selling, General & Admin. Expense(SGA) was $752 Mil.
Total Current Liabilities was $10,013 Mil.
Long-Term Debt was $6,559 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)|
|=||(3506.85374613 / 25823.5619402)||/||(3343.31456201 / 27747.9513648)|
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)|
|=||(13737.9525252 / 27747.9513648)||/||(12491.9422379 / 25823.5619402)|
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 - (26393.9650464 + 27116.724613) / 55866.6117647)||/||(1 - (23670.271731 + 26852.79971) / 52069.4754387)|
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))|
|=||(7198.26929397 / (7198.26929397 + 26852.79971))||/||(6859.363684 / (6859.363684 + 27116.724613))|
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)|
|=||(693.264170592 / 25823.5619402)||/||(752.138934409 / 27747.9513648)|
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)|
|=||((5613.08083591 + 12344.8623529) / 55866.6117647)||/||((6558.99437508 + 10012.8726269) / 52069.4754387)|
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|
|=||(8646.25737952 - 330.767218134||-||15060.2088423)||/||55866.6117647|
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 -2.80 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