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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 13.07. The lowest was -4.75. And the median was -2.80.
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 * 0.6531||+||0.528 * 3.4876||+||0.404 * 0.6921||+||0.892 * 0.879||+||0.115 * 1.0483|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.096||+||4.679 * -0.1534||-||0.327 * 0.9591|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $9.8 Mil.|
Revenue was 37.573 + 49.791 + 65.225 + 51.051 = $203.6 Mil.
Gross Profit was -6.209 + 2.831 + 7.234 + 0.739 = $4.6 Mil.
Total Current Assets was $52.6 Mil.
Total Assets was $109.9 Mil.
Property, Plant and Equipment(Net PPE) was $51.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.2 Mil.
Selling, General & Admin. Expense(SGA) was $19.4 Mil.
Total Current Liabilities was $36.8 Mil.
Long-Term Debt was $2.6 Mil.
Net Income was -10.794 + -7.613 + 1.615 + -5.015 = $-21.8 Mil.
Non Operating Income was 0.461 + -0.064 + -0.044 + 0.212 = $0.6 Mil.
Cash Flow from Operations was 9.216 + 8.403 + -3.093 + -20.038 = $-5.5 Mil.
|Accounts Receivable was $17.0 Mil.
Revenue was 49.192 + 55.295 + 68.381 + 58.8 = $231.7 Mil.
Gross Profit was 0.494 + 4.013 + 8.631 + 5.093 = $18.2 Mil.
Total Current Assets was $77.7 Mil.
Total Assets was $146.6 Mil.
Property, Plant and Equipment(Net PPE) was $58.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.9 Mil.
Selling, General & Admin. Expense(SGA) was $20.1 Mil.
Total Current Liabilities was $51.7 Mil.
Long-Term Debt was $3.1 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)|
|=||(9.784 / 203.64)||/||(17.043 / 231.668)|
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)|
|=||(2.831 / 231.668)||/||(-6.209 / 203.64)|
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 - (52.634 + 51.906) / 109.907)||/||(1 - (77.743 + 58.529) / 146.617)|
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))|
|=||(10.944 / (10.944 + 58.529))||/||(9.179 / (9.179 + 51.906))|
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)|
|=||(19.368 / 203.64)||/||(20.104 / 231.668)|
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)|
|=||((2.6 + 36.755) / 109.907)||/||((3.072 + 51.668) / 146.617)|
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|
|=||(-21.807 - 0.565||-||-5.512)||/||109.907|
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 -2.43 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