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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 -2.33.
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 * 1.1697||+||0.528 * 1.0869||+||0.404 * 1.2342||+||0.892 * 0.991||+||0.115 * 0.8769|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9994||+||4.679 * 0.0239||-||0.327 * 1.0417|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $9.30 Mil.|
Revenue was 11.931 + 12.113 + 9.815 + 9.033 = $42.89 Mil.
Gross Profit was 5.297 + 5.485 + 4.841 + 4.217 = $19.84 Mil.
Total Current Assets was $31.38 Mil.
Total Assets was $42.36 Mil.
Property, Plant and Equipment(Net PPE) was $1.06 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.54 Mil.
Selling, General & Admin. Expense(SGA) was $14.51 Mil.
Total Current Liabilities was $7.54 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.101 + 0.438 + 0.442 + -0.652 = $0.33 Mil.
Non Operating Income was -0.011 + -0.131 + 0.164 + -0.023 = $-0.00 Mil.
Cash Flow from Operations was 0.526 + -0.239 + -0.739 + -0.232 = $-0.68 Mil.
|Accounts Receivable was $8.02 Mil.
Revenue was 10.796 + 11.778 + 10.118 + 10.589 = $43.28 Mil.
Gross Profit was 5.41 + 5.901 + 5.149 + 5.3 = $21.76 Mil.
Total Current Assets was $33.21 Mil.
Total Assets was $42.25 Mil.
Property, Plant and Equipment(Net PPE) was $1.02 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $14.65 Mil.
Total Current Liabilities was $7.21 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)|
|=||(9.297 / 42.892)||/||(8.02 / 43.281)|
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)|
|=||(5.485 / 43.281)||/||(5.297 / 42.892)|
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 - (31.378 + 1.055) / 42.363)||/||(1 - (33.21 + 1.016) / 42.25)|
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))|
|=||(0.432 / (0.432 + 1.016))||/||(0.544 / (0.544 + 1.055))|
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)|
|=||(14.511 / 42.892)||/||(14.651 / 43.281)|
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 + 7.535) / 42.363)||/||((0 + 7.214) / 42.25)|
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|
|=||(0.329 - -0.001||-||-0.684)||/||42.363|
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 -2.11 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