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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 Majesco Entertainment Co was 1.84. The lowest was -9.59. And the median was -2.22.
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 Majesco Entertainment Co 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 * 4.7032||+||0.528 * 1.5508||+||0.404 * 0||+||0.892 * 0.7271||+||0.115 * 0.9088|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2322||+||4.679 * -0.933||-||0.327 * 1.1029|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $1.60 Mil.|
Revenue was 6.283 + 2.911 + 3.24 + 21.934 = $34.37 Mil.
Gross Profit was 1.114 + 1.141 + 0.061 + 3.389 = $5.71 Mil.
Total Current Assets was $11.26 Mil.
Total Assets was $11.46 Mil.
Property, Plant and Equipment(Net PPE) was $0.20 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.44 Mil.
Selling, General & Admin. Expense(SGA) was $15.95 Mil.
Total Current Liabilities was $5.91 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -5.373 + -2.727 + -3.585 + -4.512 = $-16.20 Mil.
Non Operating Income was -1.745 + -0.335 + -0.166 + 0.247 = $-2.00 Mil.
Cash Flow from Operations was -3.394 + 0.222 + -1.36 + 1.023 = $-3.51 Mil.
|Accounts Receivable was $0.47 Mil.
Revenue was 10.077 + 3.998 + 9.72 + 23.472 = $47.27 Mil.
Gross Profit was 0.746 + 1.235 + 3.035 + 7.152 = $12.17 Mil.
Total Current Assets was $33.26 Mil.
Total Assets was $37.65 Mil.
Property, Plant and Equipment(Net PPE) was $0.82 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.84 Mil.
Selling, General & Admin. Expense(SGA) was $17.81 Mil.
Total Current Liabilities was $17.60 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)|
|=||(1.597 / 34.368)||/||(0.467 / 47.267)|
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)|
|=||(1.141 / 47.267)||/||(1.114 / 34.368)|
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 - (11.258 + 0.198) / 11.456)||/||(1 - (33.263 + 0.817) / 37.649)|
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))|
|=||(6.841 / (6.841 + 0.817))||/||(11.44 / (11.44 + 0.198))|
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)|
|=||(15.953 / 34.368)||/||(17.806 / 47.267)|
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 + 5.905) / 11.456)||/||((0 + 17.596) / 37.649)|
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|
|=||(-16.197 - -1.999||-||-3.509)||/||11.456|
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.
Majesco Entertainment Co has a M-score of -3.88 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
Majesco Entertainment Co Annual Data
Majesco Entertainment Co Quarterly Data