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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 Broadwind Energy Inc was 16.14. The lowest was -5.73. And the median was -2.70.
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 Broadwind Energy 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 * 0.906||+||0.528 * 1.1852||+||0.404 * 0.8012||+||0.892 * 1.0197||+||0.115 * 1.0724|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9327||+||4.679 * -0.0368||-||0.327 * 1.023|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $21.8 Mil.|
Revenue was 51.051 + 53.798 + 60.289 + 68.381 = $233.5 Mil.
Gross Profit was 0.739 + -0.092 + 3.858 + 8.631 = $13.1 Mil.
Total Current Assets was $70.2 Mil.
Total Assets was $137.4 Mil.
Property, Plant and Equipment(Net PPE) was $61.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.6 Mil.
Selling, General & Admin. Expense(SGA) was $20.9 Mil.
Total Current Liabilities was $47.9 Mil.
Long-Term Debt was $2.9 Mil.
Net Income was -5.015 + -5.171 + -1.814 + 1.86 = $-10.1 Mil.
Non Operating Income was 0.212 + -0.006 + 0.148 + -0.016 = $0.3 Mil.
Cash Flow from Operations was -20.038 + -4.588 + 17.635 + 1.571 = $-5.4 Mil.
|Accounts Receivable was $23.6 Mil.
Revenue was 58.8 + 56.397 + 60.862 + 52.945 = $229.0 Mil.
Gross Profit was 5.093 + 2.156 + 4.618 + 3.401 = $15.3 Mil.
Total Current Assets was $77.7 Mil.
Total Assets was $153.6 Mil.
Property, Plant and Equipment(Net PPE) was $67.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.0 Mil.
Selling, General & Admin. Expense(SGA) was $21.9 Mil.
Total Current Liabilities was $52.0 Mil.
Long-Term Debt was $3.6 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)|
|=||(21.841 / 233.519)||/||(23.64 / 229.004)|
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)|
|=||(-0.092 / 229.004)||/||(0.739 / 233.519)|
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 - (70.243 + 61.4) / 137.427)||/||(1 - (77.749 + 67.797) / 153.616)|
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))|
|=||(13.984 / (13.984 + 67.797))||/||(11.647 / (11.647 + 61.4))|
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)|
|=||(20.87 / 233.519)||/||(21.943 / 229.004)|
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)|
|=||((2.897 + 47.92) / 137.427)||/||((3.564 + 51.964) / 153.616)|
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|
|=||(-10.14 - 0.338||-||-5.42)||/||137.427|
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.
Broadwind Energy Inc has a M-score of -2.69 suggests that the company will not 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
Broadwind Energy Inc Annual Data
Broadwind Energy Inc Quarterly Data