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Beneish M-Score 0.21 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.
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 -2.36.
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 * 0.9918||+||0.528 * 0.9946||+||0.404 * 5.8961||+||0.892 * 1.0166||+||0.115 * 1.2747|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0433||+||4.679 * 0.1385||-||0.327 * 0.8918|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $7.32 Mil.|
Revenue was 9.033 + 10.796 + 11.778 + 10.118 = $41.73 Mil.
Gross Profit was 4.217 + 5.41 + 5.901 + 5.149 = $20.68 Mil.
Total Current Assets was $31.93 Mil.
Total Assets was $41.17 Mil.
Property, Plant and Equipment(Net PPE) was $1.08 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.47 Mil.
Selling, General & Admin. Expense(SGA) was $14.54 Mil.
Total Current Liabilities was $7.06 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -0.652 + 0.246 + 8.764 + 0.49 = $8.85 Mil.
Non Operating Income was -0.023 + 0.007 + 0.3 + -0.112 = $0.17 Mil.
Cash Flow from Operations was -0.232 + 0.617 + 1.354 + 1.237 = $2.98 Mil.
|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.
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)|
|=||(7.319 / 41.725)||/||(7.259 / 41.042)|
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)|
|=||(5.41 / 41.042)||/||(4.217 / 41.725)|
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 - (31.933 + 1.079) / 41.167)||/||(1 - (30.46 + 0.72) / 32.264)|
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))|
|=||(0.453 / (0.453 + 0.72))||/||(0.469 / (0.469 + 1.079))|
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)|
|=||(14.539 / 41.725)||/||(13.707 / 41.042)|
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 + 7.055) / 41.167)||/||((0 + 6.2) / 32.264)|
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|
|=||(8.848 - 0.172||-||2.976)||/||41.167|
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 0.21 signals that the company is likely to 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