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GuruFocus has detected 5 Warning Signs with STMicroelectronics NV $STM.
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STMicroelectronics NV (NYSE:STM)
Beneish M-Score
-2.81 (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.

STMicroelectronics NV has a M-score of -2.86 suggests that the company is not a manipulator.

STM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.59   Max: -1.8
Current: -2.81

-3.59
-1.8

During the past 13 years, the highest Beneish M-Score of STMicroelectronics NV was -1.80. The lowest was -3.59. And the median was -2.87.


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 STMicroelectronics NV 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 * 1.0061+0.528 * 0.9741+0.404 * 1.0994+0.892 * 1.0553+0.115 * 1.1466
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9728+4.679 * -0.1025-0.327 * 1.0133
=-2.86

* 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 $946 Mil.
Revenue was 1821 + 1860 + 1797 + 1703 = $7,181 Mil.
Gross Profit was 685 + 697 + 643 + 471 = $2,496 Mil.
Total Current Assets was $4,474 Mil.
Total Assets was $8,326 Mil.
Property, Plant and Equipment(Net PPE) was $2,489 Mil.
Depreciation, Depletion and Amortization(DDA) was $666 Mil.
Selling, General & Admin. Expense(SGA) was $928 Mil.
Total Current Liabilities was $1,704 Mil.
Long-Term Debt was $1,341 Mil.
Net Income was 108 + 112 + 71 + 50 = $341 Mil.
Non Operating Income was 0 + -1 + -1 + 9 = $7 Mil.
Cash Flow from Operations was 289 + 377 + 198 + 323 = $1,187 Mil.
Accounts Receivable was $891 Mil.
Revenue was 1613 + 1668 + 1764 + 1760 = $6,805 Mil.
Gross Profit was 538 + 558 + 613 + 595 = $2,304 Mil.
Total Current Assets was $4,800 Mil.
Total Assets was $8,381 Mil.
Property, Plant and Equipment(Net PPE) was $2,333 Mil.
Depreciation, Depletion and Amortization(DDA) was $745 Mil.
Selling, General & Admin. Expense(SGA) was $904 Mil.
Total Current Liabilities was $1,597 Mil.
Long-Term Debt was $1,428 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)
=(946 / 7181) / (891 / 6805)
=0.13173653 / 0.13093314
=1.0061

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)
=(2304 / 6805) / (2496 / 7181)
=0.33857458 / 0.3475839
=0.9741

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 - (4474 + 2489) / 8326) / (1 - (4800 + 2333) / 8381)
=0.16370406 / 0.14890824
=1.0994

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
=7181 / 6805
=1.0553

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))
=(745 / (745 + 2333)) / (666 / (666 + 2489))
=0.24204029 / 0.2110935
=1.1466

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)
=(928 / 7181) / (904 / 6805)
=0.12922991 / 0.1328435
=0.9728

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)
=((1341 + 1704) / 8326) / ((1428 + 1597) / 8381)
=0.36572184 / 0.36093545
=1.0133

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
=(341 - 7 - 1187) / 8326
=-0.1025

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.

STMicroelectronics NV has a M-score of -2.86 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.

STMicroelectronics NV Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99520.67381.48550.74020.90371.10141.09690.9480.96631.1326
GMI 1.01120.97731.17250.79531.05691.12031.01310.95870.99781.0037
AQI 1.31362.4060.8960.8561.05930.64840.94851.09961.00451.0619
SGI 1.01490.98390.86491.21560.9410.87230.95160.91610.93151.011
DEPI 0.9930.9781.12780.84570.95361.01961.0791.04920.88531.0319
SGAI 1.17740.94621.1290.8341.09431.10470.96070.94921.03881.0178
LVGI 1.05441.16720.98130.92860.89821.10141.02991.17360.97331.0031
TATA -0.1834-0.1317-0.0788-0.0885-0.0451-0.1676-0.0534-0.039-0.0903-0.1066
M-score -3.25-2.90-2.47-3.07-2.77-3.41-2.69-2.81-3.01-2.82

STMicroelectronics NV Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9480.94680.96221.01680.96630.98220.9591.06191.13261.0061
GMI 0.95870.96720.97680.98740.99780.99951.04591.04031.00370.9741
AQI 1.09961.03830.99491.11271.00451.03371.02471.1231.06191.0994
SGI 0.91610.92230.93040.92990.93150.93420.93980.96081.0111.0553
DEPI 1.04921.02141.08360.90080.88530.89960.78980.96681.03191.1466
SGAI 0.94920.98391.01141.03191.03881.05061.07341.06621.01780.9728
LVGI 1.17361.24621.29831.05490.97330.92680.89730.95171.00311.0133
TATA -0.039-0.0523-0.0673-0.0897-0.0903-0.0891-0.0922-0.1007-0.1066-0.1025
M-score -2.81-2.92-3.00-2.94-3.01-2.95-2.97-2.86-2.82-2.86
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