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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.
Intermolecular Inc has a M-score of -2.93 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Intermolecular Inc was -2.06. The lowest was -3.28. And the median was -3.01.
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 * 1.0641||+||0.528 * 1.1589||+||0.404 * 1.4601||+||0.892 * 0.871||+||0.115 * 0.8656|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2228||+||4.679 * -0.1347||-||0.327 * 0.9467|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $4.62 Mil.|
Revenue was 9.934 + 15.905 + 15.617 + 17.748 = $59.20 Mil.
Gross Profit was 4.298 + 9.337 + 7.179 + 8.684 = $29.50 Mil.
Total Current Assets was $76.02 Mil.
Total Assets was $116.23 Mil.
Property, Plant and Equipment(Net PPE) was $24.53 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.01 Mil.
Selling, General & Admin. Expense(SGA) was $18.64 Mil.
Total Current Liabilities was $11.54 Mil.
Long-Term Debt was $22.00 Mil.
Net Income was -6.859 + -3.851 + -4.418 + -2.171 = $-17.30 Mil.
Non Operating Income was 0.005 + -0.005 + -0.009 + -0.002 = $-0.01 Mil.
Cash Flow from Operations was -1.388 + 2.047 + 1.8 + -4.086 = $-1.63 Mil.
|Accounts Receivable was $4.99 Mil.
Revenue was 16.608 + 17.433 + 17.443 + 16.489 = $67.97 Mil.
Gross Profit was 9.468 + 9.59 + 10.906 + 9.285 = $39.25 Mil.
Total Current Assets was $88.69 Mil.
Total Assets was $126.29 Mil.
Property, Plant and Equipment(Net PPE) was $25.94 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.69 Mil.
Selling, General & Admin. Expense(SGA) was $17.50 Mil.
Total Current Liabilities was $38.49 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)|
|=||(4.624 / 59.204)||/||(4.989 / 67.973)|
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)|
|=||(9.337 / 67.973)||/||(4.298 / 59.204)|
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 - (76.015 + 24.53) / 116.228)||/||(1 - (88.685 + 25.937) / 126.293)|
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))|
|=||(8.689 / (8.689 + 25.937))||/||(10.014 / (10.014 + 24.53))|
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)|
|=||(18.636 / 59.204)||/||(17.498 / 67.973)|
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)|
|=||((22 + 11.535) / 116.228)||/||((0 + 38.49) / 126.293)|
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|
|=||(-17.299 - -0.011||-||-1.627)||/||116.228|
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 -2.93 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