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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 13 years, the highest Beneish M-Score of InterDigital Inc was 2.89. The lowest was -4.03. And the median was -2.70.
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 * 0.4358||+||0.528 * 0.8263||+||0.404 * 1.2829||+||0.892 * 1.278||+||0.115 * 1.0088|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9439||+||4.679 * -0.1055||-||0.327 * 1.1758|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $51.7 Mil.|
Revenue was 86.121 + 77.622 + 194.234 + 57.844 = $415.8 Mil.
Gross Profit was 49.934 + 44.168 + 163.365 + 24.546 = $282.0 Mil.
Total Current Assets was $843.2 Mil.
Total Assets was $1,194.6 Mil.
Property, Plant and Equipment(Net PPE) was $12.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.2 Mil.
Selling, General & Admin. Expense(SGA) was $37.8 Mil.
Total Current Liabilities was $205.2 Mil.
Long-Term Debt was $217.8 Mil.
Net Income was 13.79 + 13.512 + 78.901 + -1.861 = $104.3 Mil.
Non Operating Income was -4.699 + -3.167 + -3.602 + -0.164 = $-11.6 Mil.
Cash Flow from Operations was 55.984 + 155.748 + 33.14 + -2.859 = $242.0 Mil.
|Accounts Receivable was $92.8 Mil.
Revenue was 99.683 + 110.623 + 67.692 + 47.363 = $325.4 Mil.
Gross Profit was 63.471 + 73.837 + 34.528 + 10.488 = $182.3 Mil.
Total Current Assets was $857.5 Mil.
Total Assets was $1,113.2 Mil.
Property, Plant and Equipment(Net PPE) was $9.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.4 Mil.
Selling, General & Admin. Expense(SGA) was $31.3 Mil.
Total Current Liabilities was $126.4 Mil.
Long-Term Debt was $208.8 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)|
|=||(51.702 / 415.821)||/||(92.83 / 325.361)|
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)|
|=||(44.168 / 325.361)||/||(49.934 / 415.821)|
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 - (843.179 + 12.546) / 1194.591)||/||(1 - (857.514 + 9.535) / 1113.183)|
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))|
|=||(33.385 / (33.385 + 9.535))||/||(42.246 / (42.246 + 12.546))|
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)|
|=||(37.753 / 415.821)||/||(31.295 / 325.361)|
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)|
|=||((217.835 + 205.169) / 1194.591)||/||((208.813 + 126.438) / 1113.183)|
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|
|=||(104.342 - -11.632||-||242.013)||/||1194.591|
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 -3.27 suggests that the company will not 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
InterDigital Inc Annual Data
InterDigital Inc Quarterly Data