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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 Vitesse Semiconductor Corp was 6.52. The lowest was -12.89. And the median was -2.98.
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 Vitesse Semiconductor Corp 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 * 0.8752||+||0.528 * 0.9508||+||0.404 * 0.9028||+||0.892 * 1.0099||+||0.115 * 0.9173|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0049||+||4.679 * -0.1366||-||0.327 * 0.6961|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $10.1 Mil.|
Revenue was 24.755 + 28.671 + 27.151 + 25.592 = $106.2 Mil.
Gross Profit was 14.702 + 18.1 + 14.897 + 14.613 = $62.3 Mil.
Total Current Assets was $61.3 Mil.
Total Assets was $67.5 Mil.
Property, Plant and Equipment(Net PPE) was $2.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.1 Mil.
Selling, General & Admin. Expense(SGA) was $30.5 Mil.
Total Current Liabilities was $23.8 Mil.
Long-Term Debt was $16.5 Mil.
Net Income was -5.041 + -2.485 + -4.388 + -5.831 = $-17.7 Mil.
Non Operating Income was -0.028 + -0.028 + -0.018 + -0.032 = $-0.1 Mil.
Cash Flow from Operations was -5.987 + 0.656 + -3.039 + -0.04 = $-8.4 Mil.
|Accounts Receivable was $11.4 Mil.
Revenue was 27.083 + 26.875 + 26.418 + 24.753 = $105.1 Mil.
Gross Profit was 16.407 + 14.122 + 14.752 + 13.384 = $58.7 Mil.
Total Current Assets was $75.3 Mil.
Total Assets was $83.4 Mil.
Property, Plant and Equipment(Net PPE) was $3.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.2 Mil.
Selling, General & Admin. Expense(SGA) was $30.1 Mil.
Total Current Liabilities was $55.3 Mil.
Long-Term Debt was $16.2 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)|
|=||(10.081 / 106.169)||/||(11.406 / 105.129)|
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)|
|=||(18.1 / 105.129)||/||(14.702 / 106.169)|
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 - (61.309 + 2.913) / 67.544)||/||(1 - (75.251 + 3.559) / 83.351)|
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))|
|=||(2.185 / (2.185 + 3.559))||/||(2.064 / (2.064 + 2.913))|
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)|
|=||(30.542 / 106.169)||/||(30.094 / 105.129)|
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)|
|=||((16.508 + 23.797) / 67.544)||/||((16.163 + 55.293) / 83.351)|
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|
|=||(-17.745 - -0.106||-||-8.41)||/||67.544|
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.
Vitesse Semiconductor Corp has a M-score of -3.20 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
Vitesse Semiconductor Corp Annual Data
Vitesse Semiconductor Corp Quarterly Data