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

Warning Sign:

Beneish M-Score 0.25 higher than -2.22, which implies that it might have manipulated its financial results.

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 0.25 signals that the company is a manipulator.

IRIX' s 10-Year Beneish M-Score Range
Min: -4.05   Max: 0.25
Current: 0.25

-4.05
0.25

During the past 13 years, the highest Beneish M-Score of Iridex Corp was 0.25. The lowest was -4.05. And the median was -2.25.


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 * 1.0147+0.528 * 0.9714+0.404 * 5.6656+0.892 * 1.1186+0.115 * 1.3045
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9954+4.679 * 0.1351-0.327 * 0.77
=0.25

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $8.34 Mil.
Revenue was 11.778 + 10.118 + 10.589 + 10.329 = $42.81 Mil.
Gross Profit was 5.901 + 5.149 + 5.3 + 5.055 = $21.41 Mil.
Total Current Assets was $32.89 Mil.
Total Assets was $41.82 Mil.
Property, Plant and Equipment(Net PPE) was $0.74 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.42 Mil.
Selling, General & Admin. Expense(SGA) was $14.19 Mil.
Total Current Liabilities was $7.04 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 8.764 + 0.49 + 0.297 + 0.487 = $10.04 Mil.
Non Operating Income was 0.3 + -0.112 + 0.091 + 0.097 = $0.38 Mil.
Cash Flow from Operations was 1.354 + 1.237 + 0.778 + 0.645 = $4.01 Mil.
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.



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)
=(8.337 / 42.814) / (7.345 / 38.273)
=0.19472602 / 0.19191075
=1.0147

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)
=(5.149 / 38.273) / (5.901 / 42.814)
=0.48564262 / 0.49995329
=0.9714

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 - (32.894 + 0.735) / 41.818) / (1 - (31.97 + 0.543) / 33.677)
=0.19582476 / 0.03456365
=5.6656

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
=42.814 / 38.273
=1.1186

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))
=(0.49 / (0.49 + 0.543)) / (0.42 / (0.42 + 0.735))
=0.47434656 / 0.36363636
=1.3045

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)
=(14.189 / 42.814) / (12.743 / 38.273)
=0.33141029 / 0.33295012
=0.9954

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 + 7.039) / 41.818) / ((0 + 7.362) / 33.677)
=0.16832464 / 0.21860617
=0.77

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
=(10.038 - 0.376 - 4.014) / 41.818
=0.1351

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 0.25 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 Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.78850.94730.94821.0571.37070.72940.99110.96681.18571.0147
GMI 0.92450.93711.19771.07840.808611.02081.01760.99410.9714
AQI 0.18261.1676.7050.29540.86471.64780.83870.65910.72735.6656
SGI 1.12860.96961.54670.87390.665811.02631.02111.13041.1186
DEPI 1.10630.8440.4740.88332.09520.80840.84111.18880.98921.3045
SGAI 0.94141.53030.99990.7310.947811.01411.07160.87930.9954
LVGI 0.8571.24562.98980.97830.79410.67890.88080.79430.99270.77
TATA -0.0396-0.127-0.5198-0.28610.0392-0.054-0.01370.06140.04350.1441
M-score -3.05-3.31-2.77-4.08-2.21-2.64-2.56-2.26-2.080.29

Iridex Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.54220.96681.13120.98980.94151.18570.97071.01431.16961.0147
GMI 1.06221.01761.01191.01161.01690.99410.98280.97610.97090.9714
AQI 0.54430.65910.72350.66680.80320.72730.7480.84320.90725.6656
SGI 1.31011.02111.03681.04851.10981.13041.14991.1641.12821.1186
DEPI 0.37181.18881.0871.10221.11480.98921.10911.34091.30281.3045
SGAI 1.07591.07161.02090.94430.8240.87930.91140.95581.03780.9954
LVGI 0.71190.79430.97921.13451.03710.99270.97870.9020.98250.77
TATA 0.04030.06240.0066-0.02120.00830.0366-0.0086-0.0031-0.02030.1351
M-score -2.58-2.25-2.39-2.70-2.44-2.11-2.49-2.33-2.320.25
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