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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 BioTime Inc was -0.28. The lowest was -10.09. And the median was -3.57.
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 BioTime 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 * 1.0775||+||0.528 * 0.978||+||0.404 * 0.6531||+||0.892 * 1.1819||+||0.115 * 0.7619|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9527||+||4.679 * 0.0375||-||0.327 * 0.7931|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1.42 Mil.|
Revenue was 1.878 + 1.191 + 1.107 + 1.067 = $5.24 Mil.
Gross Profit was 1.655 + 0.96 + 0.855 + 0.935 = $4.41 Mil.
Total Current Assets was $32.41 Mil.
Total Assets was $74.90 Mil.
Property, Plant and Equipment(Net PPE) was $2.86 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.41 Mil.
Selling, General & Admin. Expense(SGA) was $17.56 Mil.
Total Current Liabilities was $7.13 Mil.
Long-Term Debt was $0.03 Mil.
Net Income was -10.584 + -8.268 + -9.52 + -8.099 = $-36.47 Mil.
Non Operating Income was -0.54 + -0.119 + 0.165 + 0.069 = $-0.43 Mil.
Cash Flow from Operations was -9.11 + -8.609 + -10.778 + -10.357 = $-38.85 Mil.
|Accounts Receivable was $1.12 Mil.
Revenue was 1.892 + 0.714 + 1.216 + 0.614 = $4.44 Mil.
Gross Profit was 1.67 + 0.507 + 1.036 + 0.432 = $3.65 Mil.
Total Current Assets was $7.95 Mil.
Total Assets was $57.73 Mil.
Property, Plant and Equipment(Net PPE) was $3.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.95 Mil.
Selling, General & Admin. Expense(SGA) was $15.59 Mil.
Total Current Liabilities was $6.96 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)|
|=||(1.42 / 5.243)||/||(1.115 / 4.436)|
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)|
|=||(0.96 / 4.436)||/||(1.655 / 5.243)|
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 - (32.405 + 2.858) / 74.901)||/||(1 - (7.95 + 2.998) / 57.73)|
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))|
|=||(3.952 / (3.952 + 2.998))||/||(8.411 / (8.411 + 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)|
|=||(17.556 / 5.243)||/||(15.591 / 4.436)|
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)|
|=||((0.031 + 7.129) / 74.901)||/||((0 + 6.958) / 57.73)|
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|
|=||(-36.471 - -0.425||-||-38.854)||/||74.901|
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.
BioTime Inc has a M-score of -2.17 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
BioTime Inc Annual Data
BioTime Inc Quarterly Data