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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 6 years, the highest Beneish M-Score of Intermolecular Inc was -2.06. The lowest was -3.57. And the median was -3.10.
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 Intermolecular 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 * 1.5726||+||0.528 * 0.9639||+||0.404 * 1.1872||+||0.892 * 0.829||+||0.115 * 0.8409|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2242||+||4.679 * -0.2442||-||0.327 * 0.5118|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $7.84 Mil.|
Revenue was 11.528 + 10.994 + 9.845 + 11.001 = $43.37 Mil.
Gross Profit was 6.48 + 6.374 + 4.358 + 4.721 = $21.93 Mil.
Total Current Assets was $43.54 Mil.
Total Assets was $71.63 Mil.
Property, Plant and Equipment(Net PPE) was $16.09 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.27 Mil.
Selling, General & Admin. Expense(SGA) was $18.82 Mil.
Total Current Liabilities was $10.50 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -5.824 + -5.68 + -6.993 + -6.088 = $-24.59 Mil.
Non Operating Income was -0.018 + 0.002 + 0.005 + -0.016 = $-0.03 Mil.
Cash Flow from Operations was -2.845 + -2.146 + -1.82 + -0.256 = $-7.07 Mil.
|Accounts Receivable was $6.01 Mil.
Revenue was 10.855 + 9.934 + 15.905 + 15.617 = $52.31 Mil.
Gross Profit was 4.688 + 4.298 + 9.337 + 7.179 = $25.50 Mil.
Total Current Assets was $73.96 Mil.
Total Assets was $111.44 Mil.
Property, Plant and Equipment(Net PPE) was $21.75 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.59 Mil.
Selling, General & Admin. Expense(SGA) was $18.54 Mil.
Total Current Liabilities was $10.41 Mil.
Long-Term Debt was $21.50 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)|
|=||(7.841 / 43.368)||/||(6.014 / 52.311)|
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)|
|=||(6.374 / 52.311)||/||(6.48 / 43.368)|
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 - (43.535 + 16.088) / 71.632)||/||(1 - (73.955 + 21.745) / 111.437)|
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))|
|=||(10.594 / (10.594 + 21.745))||/||(10.267 / (10.267 + 16.088))|
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)|
|=||(18.816 / 43.368)||/||(18.539 / 52.311)|
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 + 10.498) / 71.632)||/||((21.5 + 10.409) / 111.437)|
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|
|=||(-24.585 - -0.027||-||-7.067)||/||71.632|
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.
Intermolecular Inc has a M-score of -3.09 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
Intermolecular Inc Annual Data
Intermolecular Inc Quarterly Data