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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 10 years, the highest Beneish M-Score of GigPeak Inc was -1.83. The lowest was -3.50. And the median was -2.81.
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 GigPeak 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 * 1.0645||+||0.528 * 0.9273||+||0.404 * 2.8406||+||0.892 * 1.3974||+||0.115 * 0.9978|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0556||+||4.679 * -0.0264||-||0.327 * 2.0234|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $14.21 Mil.|
Revenue was 15.796 + 15.368 + 11.362 + 11.075 = $53.60 Mil.
Gross Profit was 10.648 + 10.175 + 7.679 + 7.217 = $35.72 Mil.
Total Current Assets was $64.77 Mil.
Total Assets was $143.72 Mil.
Property, Plant and Equipment(Net PPE) was $3.73 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.46 Mil.
Selling, General & Admin. Expense(SGA) was $15.98 Mil.
Total Current Liabilities was $18.12 Mil.
Long-Term Debt was $10.56 Mil.
Net Income was 0.671 + 0.085 + -0.052 + 0.333 = $1.04 Mil.
Non Operating Income was 0.014 + -0.081 + -0.004 + -0.053 = $-0.12 Mil.
Cash Flow from Operations was 1.569 + -0.828 + 3.493 + 0.728 = $4.96 Mil.
|Accounts Receivable was $9.55 Mil.
Revenue was 10.419 + 9.84 + 9.06 + 9.04 = $38.36 Mil.
Gross Profit was 6.657 + 6.229 + 5.393 + 5.424 = $23.70 Mil.
Total Current Assets was $52.03 Mil.
Total Assets was $66.78 Mil.
Property, Plant and Equipment(Net PPE) was $2.45 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.56 Mil.
Selling, General & Admin. Expense(SGA) was $10.83 Mil.
Total Current Liabilities was $6.59 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)|
|=||(14.205 / 53.601)||/||(9.55 / 38.359)|
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)|
|=||(23.703 / 38.359)||/||(35.719 / 53.601)|
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 - (64.77 + 3.73) / 143.719)||/||(1 - (52.03 + 2.446) / 66.78)|
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))|
|=||(3.564 / (3.564 + 2.446))||/||(5.464 / (5.464 + 3.73))|
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)|
|=||(15.975 / 53.601)||/||(10.83 / 38.359)|
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)|
|=||((10.555 + 18.12) / 143.719)||/||((0 + 6.585) / 66.78)|
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|
|=||(1.037 - -0.124||-||4.962)||/||143.719|
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.
GigPeak Inc has a M-score of -1.83 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
GigPeak Inc Annual Data
GigPeak Inc Quarterly Data