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Digirad Corp (NAS:DRAD)
Beneish M-Score
-0.78 (As of Today)

Warning Sign:

Beneish M-Score -0.78 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.

Digirad Corp has a M-score of -0.78 signals that the company is a manipulator.

DRAD' s 10-Year Beneish M-Score Range
Min: -3.5   Max: 3.3
Current: -0.78

-3.5
3.3

During the past 13 years, the highest Beneish M-Score of Digirad Corp was 3.30. The lowest was -3.50. And the median was -3.01.


Definition

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 * 0.9098+0.528 * 0.8519+0.404 * 5.5337+0.892 * 1.0661+0.115 * 1.0525
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8314+4.679 * -0.0218-0.327 * 0.8865
=-0.78

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $6.22 Mil.
Revenue was 14.587 + 12.997 + 12.527 + 12.413 = $52.52 Mil.
Gross Profit was 4.505 + 3.442 + 3.688 + 3.818 = $15.45 Mil.
Total Current Assets was $32.02 Mil.
Total Assets was $40.78 Mil.
Property, Plant and Equipment(Net PPE) was $4.59 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.89 Mil.
Selling, General & Admin. Expense(SGA) was $12.14 Mil.
Total Current Liabilities was $7.53 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.823 + -0.148 + 0.787 + 2.512 = $3.97 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 2.888 + -1.789 + 1.382 + 2.383 = $4.86 Mil.
Accounts Receivable was $6.41 Mil.
Revenue was 12.89 + 11.546 + 13.016 + 11.817 = $49.27 Mil.
Gross Profit was 3.793 + 2.817 + 2.61 + 3.129 = $12.35 Mil.
Total Current Assets was $34.12 Mil.
Total Assets was $39.32 Mil.
Property, Plant and Equipment(Net PPE) was $4.47 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.98 Mil.
Selling, General & Admin. Expense(SGA) was $13.70 Mil.
Total Current Liabilities was $8.20 Mil.
Long-Term Debt was $0.00 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(6.219 / 52.524) / (6.412 / 49.269)
=0.11840302 / 0.13014269
=0.9098

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(3.442 / 49.269) / (4.505 / 52.524)
=0.25064442 / 0.29420836
=0.8519

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (32.017 + 4.586) / 40.775) / (1 - (34.123 + 4.469) / 39.319)
=0.1023176 / 0.01848979
=5.5337

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=52.524 / 49.269
=1.0661

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))
=(1.976 / (1.976 + 4.469)) / (1.885 / (1.885 + 4.586))
=0.30659426 / 0.29129964
=1.0525

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)
=(12.139 / 52.524) / (13.696 / 49.269)
=0.2311134 / 0.27798413
=0.8314

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 + 7.534) / 40.775) / ((0 + 8.195) / 39.319)
=0.18477008 / 0.20842341
=0.8865

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(3.974 - 0 - 4.864) / 40.775
=-0.0218

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 -0.78 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Digirad Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.67790.81120.87831.1021.00520.93531.23450.87771.06550.8777
GMI 0.92261.42820.84380.9551.11090.85951.36010.77811.05950.9066
AQI 0.42810.80581.13610.98620.43860.71640.77830.69821.29430.8873
SGI 1.21161.00071.05481.02811.08670.86610.80730.95660.93990.9775
DEPI 1.07470.64021.0731.36910.74720.96320.90231.0161.17150.9902
SGAI 1.05251.2340.98920.81560.95630.90161.16321.07580.98630.9
LVGI 0.26010.96691.0271.00411.00780.79091.01591.05921.09680.9972
TATA -0.0667-0.1296-0.0934-0.0868-0.1096-0.0726-0.1229-0.0862-0.0873-0.0467
M-score -2.93-3.18-3.011.32-3.10-3.11-2.96-3.30-2.74-2.91

Digirad Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.92190.94211.10711.06550.86880.96430.87670.87771.21320.9098
GMI 0.77430.88210.98271.05941.13841.14191.05150.90660.85950.8519
AQI 0.69910.70470.6731.29431.38591.69721.60260.88736.58755.5337
SGI 0.95020.90460.87360.93980.93430.96611.00990.97751.03541.0661
DEPI 1.11421.25681.23041.17151.12051.04420.95850.99021.05631.0525
SGAI 1.14251.21741.2680.98620.92020.89650.8570.90010.87230.8314
LVGI 1.02271.06241.1911.09681.10091.14091.06470.99720.95050.8865
TATA -0.0714-0.0678-0.068-0.0873-0.1165-0.1118-0.0883-0.04670.0235-0.0218
M-score -3.19-3.15-3.04-2.74-2.98-2.73-2.73-2.910.09-0.78
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