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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 33915.64. 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 * 0.8563||+||0.528 * 0.9654||+||0.404 * 0.8221||+||0.892 * 1.2983||+||0.115 * 0.7965|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7456||+||4.679 * -0.1429||-||0.327 * 0.934|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $3,204 Mil.|
Revenue was 6648.92297933 + 7061.93729285 + 7098.01217789 + 6937.92200724 = $27,747 Mil.
Gross Profit was 3226.8855791 + 3480.77383565 + 3526.12170235 + 3503.97809565 = $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.
Net Income was 2570.29581011 + 2512.54559739 + 2245.25894762 + 2533.44518934 = $9,862 Mil.
Non Operating Income was 707.032319035 + 77.1926827872 + -26.1028837168 + 58.586240085 = $817 Mil.
Cash Flow from Operations was 3594.61560868 + 4962.13717706 + 4901.41956309 + 3028.27918091 = $16,486 Mil.
|Accounts Receivable was $2,882 Mil.
Revenue was 6102.71703901 + 4876.19042763 + 4906.22692864 + 5486.5231408 = $21,372 Mil.
Gross Profit was 3040.67459153 + 2315.69092105 + 2196.21145241 + 2663.16075347 = $10,216 Mil.
Total Current Assets was $15,312 Mil.
Total Assets was $44,847 Mil.
Property, Plant and Equipment(Net PPE) was $27,915 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,652 Mil.
Selling, General & Admin. Expense(SGA) was $777 Mil.
Total Current Liabilities was $8,224 Mil.
Long-Term Debt was $7,058 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)|
|=||(3203.82268223 / 27746.7944573)||/||(2881.77485829 / 21371.6575361)|
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)|
|=||(3480.77383565 / 21371.6575361)||/||(3226.8855791 / 27746.7944573)|
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 - (23670.271731 + 26852.79971) / 52069.4754387)||/||(1 - (15311.7557519 + 27914.8858286) / 44846.8392798)|
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))|
|=||(5651.94306364 / (5651.94306364 + 27914.8858286))||/||(7198.26929397 / (7198.26929397 + 26852.79971))|
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)|
|=||(752.162995451 / 27746.7944573)||/||(776.996638215 / 21371.6575361)|
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)|
|=||((6558.99437508 + 10012.8726269) / 52069.4754387)||/||((7057.50083361 + 8223.91053685) / 44846.8392798)|
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|
|=||(9861.54554447 - 816.70835819||-||16486.4515297)||/||52069.4754387|
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 -3.06 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