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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 Adept Technology Inc was 9.65. The lowest was -5.59. And the median was -2.94.
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 Adept Technology 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 * 0.9718||+||0.528 * 0.9186||+||0.404 * 0.8229||+||0.892 * 1.1908||+||0.115 * 0.9425|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8932||+||4.679 * 0.0619||-||0.327 * 0.8868|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $11.10 Mil.|
Revenue was 14.402 + 14.26 + 15.121 + 14.588 = $58.37 Mil.
Gross Profit was 6.443 + 6.605 + 6.914 + 6.839 = $26.80 Mil.
Total Current Assets was $28.10 Mil.
Total Assets was $31.40 Mil.
Property, Plant and Equipment(Net PPE) was $0.99 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.08 Mil.
Selling, General & Admin. Expense(SGA) was $19.88 Mil.
Total Current Liabilities was $10.62 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.082 + -0.41 + 0.265 + 0.204 = $0.14 Mil.
Non Operating Income was 0.078 + 0.151 + 0.14 + 0.157 = $0.53 Mil.
Cash Flow from Operations was -3.142 + 1.243 + 1.008 + -1.438 = $-2.33 Mil.
|Accounts Receivable was $9.59 Mil.
Revenue was 13.571 + 13.695 + 10.943 + 10.808 = $49.02 Mil.
Gross Profit was 6.262 + 6.302 + 4.676 + 3.433 = $20.67 Mil.
Total Current Assets was $25.86 Mil.
Total Assets was $29.87 Mil.
Property, Plant and Equipment(Net PPE) was $1.33 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.29 Mil.
Selling, General & Admin. Expense(SGA) was $18.69 Mil.
Total Current Liabilities was $11.39 Mil.
Long-Term Debt was $0.00 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)|
|=||(11.098 / 58.371)||/||(9.59 / 49.017)|
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)|
|=||(6.605 / 49.017)||/||(6.443 / 58.371)|
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 - (28.095 + 0.986) / 31.404)||/||(1 - (25.855 + 1.329) / 29.869)|
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))|
|=||(1.293 / (1.293 + 1.329))||/||(1.082 / (1.082 + 0.986))|
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)|
|=||(19.879 / 58.371)||/||(18.689 / 49.017)|
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)|
|=||((0 + 10.62) / 31.404)||/||((0 + 11.39) / 29.869)|
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|
|=||(0.141 - 0.526||-||-2.329)||/||31.404|
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.
Adept Technology Inc has a M-score of -2.11 signals that the company is likely to 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
Adept Technology Inc Annual Data
Adept Technology Inc Quarterly Data