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InterDigital Inc (NAS:IDCC)
Beneish M-Score
3.94 (As of Today)

Warning Sign:

Beneish M-Score 3.94 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.

InterDigital Inc has a M-score of 3.94 signals that the company is a manipulator.

IDCC' s 10-Year Beneish M-Score Range
Min: -4.66   Max: 3.94
Current: 3.94

-4.66
3.94

During the past 13 years, the highest Beneish M-Score of InterDigital Inc was 3.94. The lowest was -4.66. And the median was -2.31.


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 InterDigital 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 * 7.8715+0.528 * 1.0939+0.404 * 0.9911+0.892 * 0.7259+0.115 * 1.0183
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5538+4.679 * 0.0826-0.327 * 1.0034
=3.94

* 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 $346.3 Mil.
Revenue was 194.234 + 57.844 + 99.683 + 110.623 = $462.4 Mil.
Gross Profit was 163.365 + 24.546 + 63.471 + 73.837 = $325.2 Mil.
Total Current Assets was $1,117.1 Mil.
Total Assets was $1,423.3 Mil.
Property, Plant and Equipment(Net PPE) was $9.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.5 Mil.
Selling, General & Admin. Expense(SGA) was $37.7 Mil.
Total Current Liabilities was $245.4 Mil.
Long-Term Debt was $213.2 Mil.
Net Income was 78.901 + -1.861 + 14.536 + 26.66 = $118.2 Mil.
Non Operating Income was -3.602 + -0.164 + -25.206 + 0.95 = $-28.0 Mil.
Cash Flow from Operations was 33.14 + -2.859 + -0.545 + -1.03 = $28.7 Mil.
Accounts Receivable was $60.6 Mil.
Revenue was 67.692 + 47.363 + 87.877 + 434.01 = $636.9 Mil.
Gross Profit was 34.528 + 10.488 + 56.572 + 388.459 = $490.0 Mil.
Total Current Assets was $903.9 Mil.
Total Assets was $1,153.9 Mil.
Property, Plant and Equipment(Net PPE) was $7.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.9 Mil.
Selling, General & Admin. Expense(SGA) was $33.4 Mil.
Total Current Liabilities was $166.0 Mil.
Long-Term Debt was $204.5 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)
=(346.335 / 462.384) / (60.609 / 636.942)
=0.74902029 / 0.09515623
=7.8715

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)
=(24.546 / 636.942) / (163.365 / 462.384)
=0.76937461 / 0.70335262
=1.0939

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 - (1117.091 + 9.369) / 1423.329) / (1 - (903.878 + 7.195) / 1153.903)
=0.2085737 / 0.2104423
=0.9911

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
=462.384 / 636.942
=0.7259

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))
=(29.874 / (29.874 + 7.195)) / (35.545 / (35.545 + 9.369))
=0.80590251 / 0.79140134
=1.0183

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)
=(37.73 / 462.384) / (33.449 / 636.942)
=0.08159884 / 0.05251499
=1.5538

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)
=((213.247 + 245.423) / 1423.329) / ((204.53 + 166.047) / 1153.903)
=0.32225157 / 0.32115091
=1.0034

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
=(118.236 - -28.022 - 28.706) / 1423.329
=0.0826

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.

InterDigital Inc has a M-score of 3.94 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.

InterDigital Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.33911.06932.29172.03610.26554.82580.11911.09172.75311.1137
GMI 111.11891.25620.98530.82981.02291.1160.94161.4446
AQI 1.55671.22530.43921.56481.36470.60161.32350.78251.00510.9965
SGI 0.9051.57332.94540.48750.97541.30171.32660.76482.19750.4907
DEPI 0.93640.91891.10740.98950.81520.84230.94670.97010.97170.9904
SGAI 1.66070.89720.11282.38431.07051.85790.26371.45470.53981.7838
LVGI 1.04380.81711.24771.37461.05610.88650.73161.79490.96320.8524
TATA -0.20590.0596-0.1822-0.2025-0.1469-0.25770.02250.12340.0849-0.1408
M-score -4.05-1.47-0.49-2.93-3.78-0.28-2.54-2.400.66-3.34

InterDigital Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.67611.48760.61392.75310.75760.72193.86111.11372.55887.8715
GMI 1.08261.0390.80030.94160.93370.90951.46921.44461.33691.0939
AQI 0.89741.16760.89391.00511.030.78441.05060.99650.97730.9911
SGI 0.820.8782.03752.19752.19122.16220.48080.49070.52380.7259
DEPI 0.96090.96420.97080.97170.97210.96781.00670.99040.99991.0183
SGAI 3.7348-12.0451-1.24960.53980.49970.42661.95071.78381.80271.5538
LVGI 1.88651.2371.22240.96321.00310.76360.68840.85240.81141.0034
TATA 0.13860.1283-0.02130.0849-0.0277-0.1641-0.0492-0.1368-0.06390.0826
M-score -2.130.71-1.850.66-1.71-2.43-0.33-3.32-1.683.94
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