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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 -11.23. And the median was -3.11.
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 * 1.0582||+||0.528 * 0.9311||+||0.404 * 0.941||+||0.892 * 1.0455||+||0.115 * 1.0399|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9809||+||4.679 * -0.0896||-||0.327 * 0.8377|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $10.9 Mil.|
Revenue was 28.671 + 27.151 + 25.592 + 27.083 = $108.5 Mil.
Gross Profit was 18.1 + 14.897 + 14.613 + 16.407 = $64.0 Mil.
Total Current Assets was $97.4 Mil.
Total Assets was $104.8 Mil.
Property, Plant and Equipment(Net PPE) was $2.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.0 Mil.
Selling, General & Admin. Expense(SGA) was $31.0 Mil.
Total Current Liabilities was $56.9 Mil.
Long-Term Debt was $16.4 Mil.
Net Income was -2.485 + -4.388 + -5.831 + -5.371 = $-18.1 Mil.
Non Operating Income was -0.028 + -0.018 + -0.032 + -1.655 = $-1.7 Mil.
Cash Flow from Operations was 0.656 + -3.039 + -0.04 + -4.523 = $-6.9 Mil.
|Accounts Receivable was $9.8 Mil.
Revenue was 26.875 + 26.418 + 24.753 + 25.727 = $103.8 Mil.
Gross Profit was 14.122 + 14.752 + 13.384 + 14.752 = $57.0 Mil.
Total Current Assets was $91.3 Mil.
Total Assets was $99.0 Mil.
Property, Plant and Equipment(Net PPE) was $3.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.4 Mil.
Selling, General & Admin. Expense(SGA) was $30.2 Mil.
Total Current Liabilities was $21.9 Mil.
Long-Term Debt was $60.8 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)|
|=||(10.85 / 108.497)||/||(9.807 / 103.773)|
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)|
|=||(14.897 / 103.773)||/||(18.1 / 108.497)|
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 - (97.386 + 2.858) / 104.824)||/||(1 - (91.259 + 3.107) / 98.961)|
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))|
|=||(2.375 / (2.375 + 3.107))||/||(2.041 / (2.041 + 2.858))|
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)|
|=||(30.981 / 108.497)||/||(30.21 / 103.773)|
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)|
|=||((16.417 + 56.915) / 104.824)||/||((60.75 + 21.896) / 98.961)|
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|
|=||(-18.075 - -1.733||-||-6.946)||/||104.824|
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 -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
Vitesse Semiconductor Corp Annual Data
Vitesse Semiconductor Corp Quarterly Data