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GuruFocus has detected 2 Warning Signs with Motorola Solutions Inc $MSI.
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Motorola Solutions Inc (NYSE:MSI)
Beneish M-Score
-2.93 (As of Today)

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.

Motorola Solutions Inc has a M-score of -2.93 suggests that the company is not a manipulator.

MSI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.72   Max: -0.86
Current: -2.93

-3.72
-0.86

During the past 13 years, the highest Beneish M-Score of Motorola Solutions Inc was -0.86. The lowest was -3.72. And the median was -2.61.


Definition

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 Motorola Solutions Inc 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 * 0.8619+0.528 * 0.9845+0.404 * 1.1655+0.892 * 1.0814+0.115 * 0.53
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8943+4.679 * -0.0835-0.327 * 1.0713
=-2.93

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,070 Mil.
Revenue was 1281 + 1883 + 1532 + 1430 = $6,126 Mil.
Gross Profit was 570 + 928 + 762 + 676 = $2,936 Mil.
Total Current Assets was $3,073 Mil.
Total Assets was $8,140 Mil.
Property, Plant and Equipment(Net PPE) was $820 Mil.
Depreciation, Depletion and Amortization(DDA) was $313 Mil.
Selling, General & Admin. Expense(SGA) was $997 Mil.
Total Current Liabilities was $2,385 Mil.
Long-Term Debt was $4,414 Mil.
Net Income was 77 + 243 + 192 + 107 = $619 Mil.
Non Operating Income was -5 + 7 + 6 + -3 = $5 Mil.
Cash Flow from Operations was 142 + 513 + 348 + 291 = $1,294 Mil.
Accounts Receivable was $1,148 Mil.
Revenue was 1193 + 1682 + 1422 + 1368 = $5,665 Mil.
Gross Profit was 502 + 838 + 685 + 648 = $2,673 Mil.
Total Current Assets was $4,001 Mil.
Total Assets was $9,049 Mil.
Property, Plant and Equipment(Net PPE) was $997 Mil.
Depreciation, Depletion and Amortization(DDA) was $171 Mil.
Selling, General & Admin. Expense(SGA) was $1,031 Mil.
Total Current Liabilities was $2,032 Mil.
Long-Term Debt was $5,023 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1070 / 6126) / (1148 / 5665)
=0.17466536 / 0.20264784
=0.8619

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2673 / 5665) / (2936 / 6126)
=0.47184466 / 0.47926869
=0.9845

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3073 + 820) / 8140) / (1 - (4001 + 997) / 9049)
=0.52174447 / 0.44767378
=1.1655

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6126 / 5665
=1.0814

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))
=(171 / (171 + 997)) / (313 / (313 + 820))
=0.14640411 / 0.27625772
=0.53

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)
=(997 / 6126) / (1031 / 5665)
=0.16274894 / 0.1819947
=0.8943

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)
=((4414 + 2385) / 8140) / ((5023 + 2032) / 9049)
=0.83525799 / 0.77964416
=1.0713

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(619 - 5 - 1294) / 8140
=-0.0835

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.

Motorola Solutions Inc has a M-score of -2.93 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Motorola Solutions Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.82910.7971.36830.9811.44930.95941.0210.98891.09530.9764
GMI 1.09390.97580.86990.88490.71541.01161.02521.01561.00561.0051
AQI 2.09490.99631.00120.90341.16991.14340.96910.84691.37681.2562
SGI 0.85520.82320.73120.95310.3941.05070.99980.74210.88251.0602
DEPI 0.741.05130.98211.040.85721.45980.90440.91671.01760.8653
SGAI 1.34381.0331.06781.09421.38350.97150.93652.36870.36950.8948
LVGI 1.00841.11440.86020.93890.83271.15391.16941.13081.44811.0635
TATA -0.026-0.1504-0.0311-0.05410.0237-0.01660.00940.184-0.0587-0.0694
M-score -2.49-3.58-2.56-2.88-2.61-2.48-2.47-2.20-2.65-2.68

Motorola Solutions Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.98890.91071.28551.28551.09531.09830.96960.95240.97640.8619
GMI 1.01561.01631.00760.99551.00561.01041.01231.00561.00510.9845
AQI 0.84690.91870.9390.97891.37681.40131.50071.33671.25621.1655
SGI 0.74210.68920.7490.81810.88250.96430.9791.00021.06021.0814
DEPI 0.91670.97560.97670.89641.01761.57621.10091.00550.86530.53
SGAI 2.36872.45942.44242.43990.36950.34960.34580.33760.89480.8943
LVGI 1.13081.20561.29421.50581.44811.36861.42651.05371.06351.0713
TATA 0.1840.18220.10570.0602-0.0587-0.0368-0.0609-0.0562-0.0694-0.0835
M-score -2.20-2.33-2.31-2.53-2.65-2.37-2.62-2.55-2.68-2.93
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