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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 -2.88.
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 * 0.9542||+||0.528 * -4.28||+||0.404 * 1.0295||+||0.892 * 0.7595||+||0.115 * 0.8641|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3144||+||4.679 * -0.4704||-||0.327 * 1.0203|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $13.11 Mil.|
Revenue was 8.663 + 11.731 + 11.442 + 15.681 = $47.52 Mil.
Gross Profit was -2.242 + -0.366 + -1.021 + 1.723 = $-1.91 Mil.
Total Current Assets was $32.63 Mil.
Total Assets was $113.85 Mil.
Property, Plant and Equipment(Net PPE) was $60.97 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.47 Mil.
Selling, General & Admin. Expense(SGA) was $21.99 Mil.
Total Current Liabilities was $8.66 Mil.
Long-Term Debt was $6.26 Mil.
Net Income was -9.526 + -6.443 + -26.838 + -5.813 = $-48.62 Mil.
Non Operating Income was -0.612 + 0.451 + -0.94 + -0.445 = $-1.55 Mil.
Cash Flow from Operations was 1.334 + 1.75 + 1.148 + 2.249 = $6.48 Mil.
|Accounts Receivable was $18.09 Mil.
Revenue was 7.554 + 17.142 + 14.963 + 22.906 = $62.57 Mil.
Gross Profit was -2.609 + 4.576 + 1.767 + 7.007 = $10.74 Mil.
Total Current Assets was $45.57 Mil.
Total Assets was $159.71 Mil.
Property, Plant and Equipment(Net PPE) was $86.54 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.00 Mil.
Selling, General & Admin. Expense(SGA) was $22.03 Mil.
Total Current Liabilities was $9.36 Mil.
Long-Term Debt was $11.16 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)|
|=||(13.112 / 47.517)||/||(18.093 / 62.565)|
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)|
|=||(10.741 / 62.565)||/||(-1.906 / 47.517)|
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 - (32.634 + 60.965) / 113.851)||/||(1 - (45.573 + 86.542) / 159.71)|
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))|
|=||(34.996 / (34.996 + 86.542))||/||(30.466 / (30.466 + 60.965))|
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)|
|=||(21.987 / 47.517)||/||(22.026 / 62.565)|
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)|
|=||((6.262 + 8.663) / 113.851)||/||((11.157 + 9.363) / 159.71)|
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|
|=||(-48.62 - -1.546||-||6.481)||/||113.851|
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 -7.79 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