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Cisco Systems (XSGO:CSCO) Beneish M-Score

: -2.56 (As of Today)
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The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.56 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Cisco Systems's Beneish M-Score or its related term are showing as below:

XSGO:CSCO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.05   Med: -2.62   Max: -2.34
Current: -2.56

During the past 13 years, the highest Beneish M-Score of Cisco Systems was -2.34. The lowest was -3.05. And the median was -2.62.


Cisco Systems Beneish M-Score Historical Data

The historical data trend for Cisco Systems's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Cisco Systems Annual Data
Trend Jul14 Jul15 Jul16 Jul17 Jul18 Jul19 Jul20 Jul21 Jul22 Jul23
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.60 -2.60 -2.65 -2.52 -2.90

Cisco Systems Quarterly Data
Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.79 -2.84 -2.90 -2.74 -2.56

Competitive Comparison

For the Communication Equipment subindustry, Cisco Systems's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Cisco Systems Beneish M-Score Distribution

For the Hardware industry and Technology sector, Cisco Systems's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Cisco Systems's Beneish M-Score falls into.



Cisco Systems Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Cisco Systems 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 * 0.883+0.528 * 0.9643+0.404 * 0.976+0.892 * 1.0766+0.115 * 1.0316
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0282+4.679 * -0.001483-0.327 * 1.0187
=-2.56

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Jan24) TTM:Last Year (Jan23) TTM:
Total Receivables was $8,360 Mil.
Revenue was 12791 + 14668 + 15203 + 14571 = $57,233 Mil.
Gross Profit was 8217 + 9557 + 9748 + 9232 = $36,754 Mil.
Total Current Assets was $42,127 Mil.
Total Assets was $101,174 Mil.
Property, Plant and Equipment(Net PPE) was $2,005 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,696 Mil.
Selling, General, & Admin. Expense(SGA) was $12,714 Mil.
Total Current Liabilities was $30,851 Mil.
Long-Term Debt & Capital Lease Obligation was $6,669 Mil.
Net Income was 2634 + 3638 + 3958 + 3212 = $13,442 Mil.
Non Operating Income was -151 + -206 + -186 + -229 = $-772 Mil.
Cash Flow from Operations was 808 + 2371 + 5966 + 5219 = $14,364 Mil.
Total Receivables was $8,794 Mil.
Revenue was 13592 + 13632 + 13102 + 12835 = $53,161 Mil.
Gross Profit was 8427 + 8346 + 8025 + 8121 = $32,919 Mil.
Total Current Assets was $38,515 Mil.
Total Assets was $95,840 Mil.
Property, Plant and Equipment(Net PPE) was $1,964 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,761 Mil.
Selling, General, & Admin. Expense(SGA) was $11,486 Mil.
Total Current Liabilities was $27,252 Mil.
Long-Term Debt & Capital Lease Obligation was $7,637 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(8360 / 57233) / (8794 / 53161)
=0.14607 / 0.165422
=0.883

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)
=(32919 / 53161) / (36754 / 57233)
=0.619232 / 0.642182
=0.9643

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (42127 + 2005) / 101174) / (1 - (38515 + 1964) / 95840)
=0.563801 / 0.57764
=0.976

4. SGI = Sales Growth Index

Ratio of Revenue 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
=57233 / 53161
=1.0766

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(1761 / (1761 + 1964)) / (1696 / (1696 + 2005))
=0.472752 / 0.458255
=1.0316

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(12714 / 57233) / (11486 / 53161)
=0.222145 / 0.216061
=1.0282

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((6669 + 30851) / 101174) / ((7637 + 27252) / 95840)
=0.370846 / 0.364034
=1.0187

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
=(13442 - -772 - 14364) / 101174
=-0.001483

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Cisco Systems has a M-score of -2.56 suggests that the company is unlikely to be a manipulator.


Cisco Systems Beneish M-Score Related Terms

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Cisco Systems (XSGO:CSCO) Business Description

Address
170 West Tasman Drive, San Jose, CA, USA, 95134-1706
Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software like firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff—25,000 strong across 90 countries. Overall, Cisco employees 80,000 employees and sells its products globally.