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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 Iridex Corp was 10000000.00. The lowest was -10000000.00. And the median was -2.44.
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 Iridex Corp 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 * 1.1696||+||0.528 * 0.9709||+||0.404 * 0.9072||+||0.892 * 1.1282||+||0.115 * 1.3028|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0378||+||4.679 * -0.0203||-||0.327 * 0.9825|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $7.58 Mil.|
Revenue was 10.118 + 10.589 + 10.329 + 10.598 = $41.63 Mil.
Gross Profit was 5.149 + 5.3 + 5.055 + 5.15 = $20.65 Mil.
Total Current Assets was $30.77 Mil.
Total Assets was $32.58 Mil.
Property, Plant and Equipment(Net PPE) was $0.75 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $14.02 Mil.
Total Current Liabilities was $6.51 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.49 + 0.297 + 0.487 + 0.412 = $1.69 Mil.
Non Operating Income was -0.112 + 0.091 + 0.097 + 0.2 = $0.28 Mil.
Cash Flow from Operations was 1.237 + 0.778 + 0.645 + -0.59 = $2.07 Mil.
|Accounts Receivable was $5.74 Mil.
Revenue was 9.526 + 9.21 + 8.939 + 9.228 = $36.90 Mil.
Gross Profit was 4.724 + 4.482 + 4.231 + 4.338 = $17.78 Mil.
Total Current Assets was $30.36 Mil.
Total Assets was $32.04 Mil.
Property, Plant and Equipment(Net PPE) was $0.53 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.48 Mil.
Selling, General & Admin. Expense(SGA) was $11.97 Mil.
Total Current Liabilities was $6.52 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)|
|=||(7.578 / 41.634)||/||(5.743 / 36.903)|
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)|
|=||(5.3 / 36.903)||/||(5.149 / 41.634)|
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 - (30.772 + 0.748) / 32.579)||/||(1 - (30.364 + 0.526) / 32.038)|
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))|
|=||(0.481 / (0.481 + 0.526))||/||(0.433 / (0.433 + 0.748))|
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)|
|=||(14.018 / 41.634)||/||(11.972 / 36.903)|
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 + 6.513) / 32.579)||/||((0 + 6.519) / 32.038)|
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|
|=||(1.686 - 0.276||-||2.07)||/||32.579|
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.
Iridex Corp has a M-score of -2.32 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
Iridex Corp Annual Data
Iridex Corp Quarterly Data