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Iridex Corp (NAS:IRIX)
Beneish M-Score
-2.32 (As of Today)

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.

Iridex Corp has a M-score of -2.32 suggests that the company is not a manipulator.

IRIX' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 10000000
Current: -2.32

-10000000
10000000

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 -2.46.


Definition

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 * 1.0143+0.528 * 0.9761+0.404 * 0.8432+0.892 * 1.164+0.115 * 1.3409
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9558+4.679 * 0.0004-0.327 * 0.902
=-2.32

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $7.26 Mil.
Revenue was 10.589 + 10.329 + 10.598 + 9.526 = $41.04 Mil.
Gross Profit was 5.3 + 5.055 + 5.15 + 4.724 = $20.23 Mil.
Total Current Assets was $30.46 Mil.
Total Assets was $32.26 Mil.
Property, Plant and Equipment(Net PPE) was $0.72 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.45 Mil.
Selling, General & Admin. Expense(SGA) was $13.71 Mil.
Total Current Liabilities was $6.20 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.297 + 0.487 + 0.412 + 0.53 = $1.73 Mil.
Non Operating Income was 0.091 + 0.097 + 0 + 0 = $0.19 Mil.
Cash Flow from Operations was 0.778 + 0.645 + -0.59 + 0.691 = $1.52 Mil.
Accounts Receivable was $6.15 Mil.
Revenue was 9.21 + 8.939 + 9.228 + 7.881 = $35.26 Mil.
Gross Profit was 4.482 + 4.231 + 4.338 + 3.911 = $16.96 Mil.
Total Current Assets was $29.69 Mil.
Total Assets was $31.37 Mil.
Property, Plant and Equipment(Net PPE) was $0.43 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.46 Mil.
Selling, General & Admin. Expense(SGA) was $12.32 Mil.
Total Current Liabilities was $6.68 Mil.
Long-Term Debt was $0.00 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(7.259 / 41.042) / (6.148 / 35.258)
=0.1768676 / 0.17437177
=1.0143

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(5.055 / 35.258) / (5.3 / 41.042)
=0.48108231 / 0.49288534
=0.9761

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (30.46 + 0.72) / 32.264) / (1 - (29.688 + 0.432) / 31.37)
=0.03359782 / 0.03984699
=0.8432

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=41.042 / 35.258
=1.164

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))
=(0.464 / (0.464 + 0.432)) / (0.453 / (0.453 + 0.72))
=0.51785714 / 0.38618926
=1.3409

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)
=(13.707 / 41.042) / (12.32 / 35.258)
=0.33397495 / 0.34942424
=0.9558

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 + 6.2) / 32.264) / ((0 + 6.683) / 31.37)
=0.19216464 / 0.21303793
=0.902

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1.726 - 0.188 - 1.524) / 32.264
=0.0004

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Iridex Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.09240.78850.94730.94821.0571.02480.99480.97190.96681.1857
GMI 0.97820.92450.93711.19771.07840.86440.98070.97381.01760.9941
AQI 3.36650.18261.1676.7050.29540.86471.6320.84680.65910.7273
SGI 1.0351.12860.96961.54670.87390.89051.01120.75891.02111.1304
DEPI 1.4571.10630.8440.4740.88331.22431.10281.05511.18880.9892
SGAI 1.09720.94141.53030.99990.7310.89040.99921.08031.07160.8793
LVGI 1.3390.8571.24562.98980.97830.79410.67890.88080.79430.9927
TATA -0.0318-0.0396-0.127-0.2049-0.2861-0.1772-0.0422-0.03850.06140.0435
M-score -1.64-3.05-3.31-1.30-4.08-3.40-2.31-2.95-2.26-2.08

Iridex Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.92421.28111.280.96681.02870.82120.70751.18570.97071.0143
GMI 0.95310.92230.87351.01761.03351.06341.10360.99410.98280.9761
AQI 0.73560.73680.54430.65910.72350.66680.80320.72730.7480.8432
SGI 0.68520.61920.55491.02111.14021.26381.47691.13041.14991.164
DEPI 1.15611.1611.21231.18881.03320.99210.98140.98921.10911.3409
SGAI 1.12761.21971.35581.07160.99540.89290.74290.87930.91140.9558
LVGI 0.64040.69310.71190.79430.97921.13451.03710.99270.97870.902
TATA 0.03750.0410.02080.0624-0.0032-0.02640.00570.0401-0.00510.0004
M-score -2.67-2.44-2.72-2.25-2.43-2.66-2.29-2.10-2.47-2.32
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