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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 7 years, the highest Beneish M-Score of Intermolecular Inc was -2.06. The lowest was -4.17. 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 * 0.3989||+||0.528 * 0.7573||+||0.404 * 1.1041||+||0.892 * 1.1478||+||0.115 * 0.8467|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8181||+||4.679 * -0.2706||-||0.327 * 0.7746|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $3.59 Mil.|
Revenue was 10.574 + 11.729 + 14.518 + 12.955 = $49.78 Mil.
Gross Profit was 7.118 + 7.597 + 9.722 + 8.806 = $33.24 Mil.
Total Current Assets was $34.49 Mil.
Total Assets was $57.09 Mil.
Property, Plant and Equipment(Net PPE) was $12.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.97 Mil.
Selling, General & Admin. Expense(SGA) was $17.67 Mil.
Total Current Liabilities was $6.48 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -6.775 + -3.988 + -1.68 + -2.516 = $-14.96 Mil.
Non Operating Income was 0.089 + 0.099 + 0.016 + -0.001 = $0.20 Mil.
Cash Flow from Operations was -1.821 + 2.63 + -2.509 + 1.984 = $0.28 Mil.
|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 $10.90 Mil.
Selling, General & Admin. Expense(SGA) was $18.82 Mil.
Total Current Liabilities was $10.50 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)|
|=||(3.59 / 49.776)||/||(7.841 / 43.368)|
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)|
|=||(21.933 / 43.368)||/||(33.243 / 49.776)|
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 - (34.491 + 12.031) / 57.089)||/||(1 - (43.535 + 16.088) / 71.632)|
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))|
|=||(10.896 / (10.896 + 16.088))||/||(10.968 / (10.968 + 12.031))|
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)|
|=||(17.667 / 49.776)||/||(18.816 / 43.368)|
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 + 6.481) / 57.089)||/||((0 + 10.498) / 71.632)|
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|
|=||(-14.959 - 0.203||-||0.284)||/||57.089|
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 -4.17 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