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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 Mitcham Industries Inc was 18.78. The lowest was -24.03. And the median was -2.87.
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 Mitcham Industries Inc 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 * 1.0502||+||0.528 * -4.5423||+||0.404 * 1.1456||+||0.892 * 0.6225||+||0.115 * 0.8745|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4569||+||4.679 * -0.4314||-||0.327 * 1.2239|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $18.14 Mil.|
Revenue was 11.731 + 11.442 + 15.681 + 7.554 = $46.41 Mil.
Gross Profit was -0.366 + -1.021 + 1.723 + -2.609 = $-2.27 Mil.
Total Current Assets was $37.03 Mil.
Total Assets was $126.50 Mil.
Property, Plant and Equipment(Net PPE) was $68.59 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.36 Mil.
Selling, General & Admin. Expense(SGA) was $21.53 Mil.
Total Current Liabilities was $10.72 Mil.
Long-Term Debt was $14.52 Mil.
Net Income was -6.443 + -26.838 + -5.813 + -5.848 = $-44.94 Mil.
Non Operating Income was 0.451 + -0.94 + -0.445 + 0.325 = $-0.61 Mil.
Cash Flow from Operations was 1.75 + 1.023 + 2.249 + 5.212 = $10.23 Mil.
|Accounts Receivable was $27.75 Mil.
Revenue was 17.142 + 14.963 + 22.906 + 19.545 = $74.56 Mil.
Gross Profit was 4.576 + 1.767 + 7.007 + 3.237 = $16.59 Mil.
Total Current Assets was $56.86 Mil.
Total Assets was $178.32 Mil.
Property, Plant and Equipment(Net PPE) was $95.77 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.21 Mil.
Selling, General & Admin. Expense(SGA) was $23.74 Mil.
Total Current Liabilities was $11.71 Mil.
Long-Term Debt was $17.36 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)|
|=||(18.138 / 46.408)||/||(27.746 / 74.556)|
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)|
|=||(16.587 / 74.556)||/||(-2.273 / 46.408)|
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 - (37.028 + 68.594) / 126.5)||/||(1 - (56.858 + 95.769) / 178.317)|
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))|
|=||(36.211 / (36.211 + 95.769))||/||(31.362 / (31.362 + 68.594))|
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)|
|=||(21.525 / 46.408)||/||(23.735 / 74.556)|
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)|
|=||((14.516 + 10.717) / 126.5)||/||((17.356 + 11.707) / 178.317)|
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|
|=||(-44.942 - -0.609||-||10.234)||/||126.5|
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.
Mitcham Industries Inc has a M-score of -7.82 suggests that the company will not 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
Mitcham Industries Inc Annual Data
Mitcham Industries Inc Quarterly Data