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GuruFocus has detected 6 Warning Signs with Digirad Corp $DRAD.
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Digirad Corp (NAS:DRAD)
Beneish M-Score
-1.89 (As of Today)

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 -1.89 signals that the company is a manipulator.

DRAD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.3   Max: 1.32
Current: -1.89

-3.3
1.32

During the past 13 years, the highest Beneish M-Score of Digirad Corp was 1.32. The lowest was -3.30. And the median was -2.94.


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 * 0.9666+0.528 * 1.0327+0.404 * 1.1038+0.892 * 2.0628+0.115 * 1.1726
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9954+4.679 * 0.0313-0.327 * 2.685
=-1.89

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $14.5 Mil.
Revenue was 31.134 + 31.086 + 32.09 + 31.157 = $125.5 Mil.
Gross Profit was 8.642 + 8.301 + 9.765 + 9.065 = $35.8 Mil.
Total Current Assets was $27.1 Mil.
Total Assets was $106.3 Mil.
Property, Plant and Equipment(Net PPE) was $31.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.9 Mil.
Selling, General & Admin. Expense(SGA) was $30.0 Mil.
Total Current Liabilities was $22.7 Mil.
Long-Term Debt was $16.1 Mil.
Net Income was 1.978 + -0.283 + 0.998 + 11.609 = $14.3 Mil.
Non Operating Income was 0.626 + -0.428 + -0.058 + 0 = $0.1 Mil.
Cash Flow from Operations was 4.018 + 3.017 + 3.063 + 0.736 = $10.8 Mil.
Accounts Receivable was $7.3 Mil.
Revenue was 15.577 + 15.862 + 15.547 + 13.839 = $60.8 Mil.
Gross Profit was 4.692 + 4.802 + 4.767 + 3.648 = $17.9 Mil.
Total Current Assets was $31.7 Mil.
Total Assets was $64.1 Mil.
Property, Plant and Equipment(Net PPE) was $6.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.4 Mil.
Selling, General & Admin. Expense(SGA) was $14.6 Mil.
Total Current Liabilities was $8.7 Mil.
Long-Term Debt was $0.0 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)
=(14.503 / 125.467) / (7.274 / 60.825)
=0.11559215 / 0.11958898
=0.9666

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)
=(17.909 / 60.825) / (35.773 / 125.467)
=0.29443485 / 0.2851188
=1.0327

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 - (27.079 + 31.407) / 106.263) / (1 - (31.747 + 6.252) / 64.113)
=0.44961087 / 0.40731209
=1.1038

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
=125.467 / 60.825
=2.0628

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))
=(2.441 / (2.441 + 6.252)) / (9.889 / (9.889 + 31.407))
=0.28080064 / 0.23946629
=1.1726

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)
=(30.037 / 125.467) / (14.629 / 60.825)
=0.2394016 / 0.24050966
=0.9954

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)
=((16.07 + 22.673) / 106.263) / ((0 + 8.706) / 64.113)
=0.36459539 / 0.13579149
=2.685

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
=(14.302 - 0.14 - 10.834) / 106.263
=0.0313

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 -1.89 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 local exchange's currency.

Digirad Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.1021.00520.93531.23450.87771.06550.87770.97931.11040.9666
GMI 0.9551.11090.85951.36010.77811.05950.90660.95541.01631.0327
AQI 10.98620.43860.71640.77830.69821.39710.8226.57884.081.1038
SGI 1.02811.08670.86610.80730.95660.93990.97751.12621.09382.0627
DEPI 1.36910.74720.96320.90231.0161.17150.99021.09211.02841.1726
SGAI 0.81560.95630.90161.16321.07580.98630.90.92661.02290.9954
LVGI 1.00411.00780.79091.01591.05921.09680.99721.07590.68612.685
TATA -0.0868-0.1499-0.0724-0.1229-0.0861-0.0856-0.0467-0.04310.28310.0306
M-score 1.32-3.29-3.11-2.96-3.30-2.69-2.94-0.360.38-1.89

Digirad Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.00210.97930.86981.06691.14611.11041.4151.17610.88640.9666
GMI 0.87990.95540.97190.98731.00841.01630.99970.99621.01771.0327
AQI 5.96936.57881.37131.383.81784.083.02363.16691.23641.1038
SGI 1.08281.12621.11061.0931.11.09381.38431.64931.85062.0628
DEPI 1.13991.09211.06691.13761.10521.02842.26371.57791.23591.1726
SGAI 0.86480.92660.97961.00961.00791.0231.09691.11051.08170.9954
LVGI 1.01961.07591.02471.08450.73970.68612.22031.9482.54072.685
TATA -0.0444-0.0431-0.063-0.03570.26640.28310.24390.24810.05740.0313
M-score -0.63-0.36-2.66-2.370.230.38-0.070.03-1.94-1.89
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