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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 10 years, the highest Beneish M-Score of Broadwind Energy Inc was 13.07. The lowest was -4.75. And the median was -2.85.
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 * 0.955||+||0.528 * 0.7895||+||0.404 * 0.7985||+||0.892 * 1.1185||+||0.115 * 1.0916|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8843||+||4.679 * -0.0609||-||0.327 * 0.948|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $20.0 Mil.|
Revenue was 53.798 + 60.289 + 68.381 + 58.8 = $241.3 Mil.
Gross Profit was -0.092 + 3.858 + 8.631 + 5.093 = $17.5 Mil.
Total Current Assets was $77.7 Mil.
Total Assets was $146.6 Mil.
Property, Plant and Equipment(Net PPE) was $63.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.2 Mil.
Selling, General & Admin. Expense(SGA) was $21.2 Mil.
Total Current Liabilities was $51.7 Mil.
Long-Term Debt was $3.1 Mil.
Net Income was -5.171 + -1.814 + 1.86 + -1.043 = $-6.2 Mil.
Non Operating Income was -0.006 + 0.148 + -0.016 + 0.136 = $0.3 Mil.
Cash Flow from Operations was -4.588 + 17.635 + 1.571 + -12.117 = $2.5 Mil.
|Accounts Receivable was $18.7 Mil.
Revenue was 56.397 + 60.862 + 52.945 + 45.506 = $215.7 Mil.
Gross Profit was 2.156 + 4.618 + 3.401 + 2.17 = $12.3 Mil.
Total Current Assets was $86.3 Mil.
Total Assets was $163.7 Mil.
Property, Plant and Equipment(Net PPE) was $69.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.9 Mil.
Selling, General & Admin. Expense(SGA) was $21.4 Mil.
Total Current Liabilities was $60.5 Mil.
Long-Term Debt was $3.9 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)|
|=||(20.012 / 241.268)||/||(18.735 / 215.71)|
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)|
|=||(3.858 / 215.71)||/||(-0.092 / 241.268)|
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 - (77.742 + 62.952) / 146.617)||/||(1 - (86.335 + 69.077) / 163.694)|
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))|
|=||(14.856 / (14.856 + 69.077))||/||(12.183 / (12.183 + 62.952))|
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)|
|=||(21.181 / 241.268)||/||(21.414 / 215.71)|
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)|
|=||((3.077 + 51.667) / 146.617)||/||((3.948 + 60.528) / 163.694)|
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|
|=||(-6.168 - 0.262||-||2.501)||/||146.617|
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 -2.85 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