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Beneish M-Score 0.02 higher than -2.22, which implies that it might have manipulated its financial results.
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 Digirad Corp was 3.30. The lowest was -3.69. And the median was -2.94.
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 Digirad Corp 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 * 1.1761||+||0.528 * 0.9962||+||0.404 * 3.1669||+||0.892 * 1.6493||+||0.115 * 1.5779|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1105||+||4.679 * 0.246||-||0.327 * 1.948|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $14.07 Mil.|
Revenue was 32.09 + 31.157 + 15.577 + 15.862 = $94.69 Mil.
Gross Profit was 9.765 + 9.065 + 4.692 + 4.802 = $28.32 Mil.
Total Current Assets was $29.09 Mil.
Total Assets was $110.54 Mil.
Property, Plant and Equipment(Net PPE) was $32.02 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.20 Mil.
Selling, General & Admin. Expense(SGA) was $24.53 Mil.
Total Current Liabilities was $23.91 Mil.
Long-Term Debt was $19.24 Mil.
Net Income was 0.998 + 11.609 + 0.678 + 19.12 = $32.41 Mil.
Non Operating Income was -0.058 + 0 + 0 + 0 = $-0.06 Mil.
Cash Flow from Operations was 3.063 + 0.736 + 0.755 + 0.719 = $5.27 Mil.
|Accounts Receivable was $7.25 Mil.
Revenue was 15.547 + 13.839 + 14.143 + 13.881 = $57.41 Mil.
Gross Profit was 4.767 + 3.648 + 4.284 + 4.409 = $17.11 Mil.
Total Current Assets was $33.84 Mil.
Total Assets was $46.42 Mil.
Property, Plant and Equipment(Net PPE) was $6.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.08 Mil.
Selling, General & Admin. Expense(SGA) was $13.40 Mil.
Total Current Liabilities was $9.30 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)|
|=||(14.067 / 94.686)||/||(7.252 / 57.41)|
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)|
|=||(17.108 / 57.41)||/||(28.324 / 94.686)|
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 - (29.09 + 32.019) / 110.538)||/||(1 - (33.835 + 6.034) / 46.424)|
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))|
|=||(2.077 / (2.077 + 6.034))||/||(6.203 / (6.203 + 32.019))|
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)|
|=||(24.534 / 94.686)||/||(13.395 / 57.41)|
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)|
|=||((19.24 + 23.909) / 110.538)||/||((0 + 9.303) / 46.424)|
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|
|=||(32.405 - -0.058||-||5.273)||/||110.538|
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.
Digirad Corp has a M-score of 0.02 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
Digirad Corp Annual Data
Digirad Corp Quarterly Data