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Iridex Corporation (NAS:IRIX)
Beneish M-Score
-2.08 (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 Corporation has a M-score of -2.08 signals that the company is a manipulator.

IRIX' s 10-Year Beneish M-Score Range
Min: -4.05   Max: 0.05
Current: -2.08

-4.05
0.05

During the past 13 years, the highest Beneish M-Score of Iridex Corporation was 0.05. The lowest was -4.05. And the median was -2.41.


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 Corporation 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 * 1.1857+0.528 * 0.9941+0.404 * 0.7273+0.892 * 1.1304+0.115 * 0.9892
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8793+4.679 * 0.044-0.327 * 0.9927
=-2.08

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $7.35 Mil.
Revenue was 10.598 + 9.526 + 9.21 + 8.939 = $38.27 Mil.
Gross Profit was 5.15 + 4.724 + 4.482 + 4.231 = $18.59 Mil.
Total Current Assets was $31.97 Mil.
Total Assets was $33.68 Mil.
Property, Plant and Equipment(Net PPE) was $0.54 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.49 Mil.
Selling, General & Admin. Expense(SGA) was $12.74 Mil.
Total Current Liabilities was $7.36 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.412 + 0.53 + 0.415 + 0.874 = $2.23 Mil.
Non Operating Income was 0 + 0 + 0 + -0.018 = $-0.02 Mil.
Cash Flow from Operations was -0.59 + 0.691 + 1.072 + -0.406 = $0.77 Mil.
Accounts Receivable was $5.48 Mil.
Revenue was 9.228 + 7.881 + 8.445 + 8.305 = $33.86 Mil.
Gross Profit was 4.338 + 3.911 + 4.111 + 3.986 = $16.35 Mil.
Total Current Assets was $27.06 Mil.
Total Assets was $28.91 Mil.
Property, Plant and Equipment(Net PPE) was $0.48 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $12.82 Mil.
Total Current Liabilities was $6.37 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)
=(7.345 / 38.273) / (5.48 / 33.859)
=0.19191075 / 0.16184766
=1.1857

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)
=(4.724 / 33.859) / (5.15 / 38.273)
=0.48276677 / 0.48564262
=0.9941

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 - (31.97 + 0.543) / 33.677) / (1 - (27.055 + 0.483) / 28.912)
=0.03456365 / 0.04752352
=0.7273

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
=38.273 / 33.859
=1.1304

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))
=(0.427 / (0.427 + 0.483)) / (0.49 / (0.49 + 0.543))
=0.46923077 / 0.47434656
=0.9892

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)
=(12.743 / 38.273) / (12.821 / 33.859)
=0.33295012 / 0.37865855
=0.8793

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 + 7.362) / 33.677) / ((0 + 6.367) / 28.912)
=0.21860617 / 0.22021998
=0.9927

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
=(2.231 - -0.018 - 0.767) / 33.677
=0.044

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 Corporation has a M-score of -2.08 signals that the company is likely to 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 Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.09240.78850.94730.94821.0571.37070.72940.99110.96681.1857
GMI 0.97820.92450.93711.19771.07840.808611.02081.01760.9941
AQI 3.36650.18261.1676.7050.29540.86471.64780.83870.65910.7273
SGI 1.0351.12860.96961.54670.87390.665811.02631.02111.1304
DEPI 1.4571.10630.8440.4740.88332.09520.80840.84111.18880.9892
SGAI 1.09720.94141.53030.99990.7310.947811.01411.07160.8793
LVGI 1.3390.8571.24562.98980.97830.79410.67890.88080.79430.9927
TATA -0.0318-0.0396-0.127-0.5198-0.28610.0392-0.054-0.01370.06140.0435
M-score -1.64-3.05-3.31-2.77-4.08-2.21-2.64-2.56-2.26-2.08

Iridex Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.23130.99110.56630.65910.54220.96681.13120.98980.94151.1857
GMI 0.97011.02081.04031.06371.06221.01761.01191.01161.01690.9941
AQI 0.90540.83870.73560.73680.54430.65910.72350.66680.80320.7273
SGI 0.79011.02631.11841.20351.31011.02111.03681.04851.10981.1304
DEPI 0.57760.84110.73870.49580.37181.18881.0871.10221.11480.9892
SGAI 1.05921.01411.01071.04461.07591.07161.02090.94430.8240.8793
LVGI 0.84530.88080.64040.69310.71190.79430.97921.13451.03710.9927
TATA -0.0365-0.01380.06390.04350.04030.06240.0078-0.0170.00980.044
M-score -2.69-2.57-2.47-2.45-2.58-2.25-2.38-2.68-2.43-2.08
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