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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 MOD-PAC Corporation was 0.00. The lowest was 0.00. And the median was 0.00.
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 MOD-PAC Corporation 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 * 0.9427||+||0.528 * 0.7848||+||0.404 * 1.2483||+||0.892 * 1.08||+||0.115 * 0.9155|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0437||+||4.679 * -0.1135||-||0.327 * 0.8531|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun13) TTM:||Last Year (Jun12) TTM:|
|Accounts Receivable was $5.97 Mil.|
Revenue was 14.294 + 14.42 + 16.617 + 15.374 = $60.71 Mil.
Gross Profit was 2.43 + 2.641 + 3.867 + 3.302 = $12.24 Mil.
Total Current Assets was $17.79 Mil.
Total Assets was $33.12 Mil.
Property, Plant and Equipment(Net PPE) was $14.34 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.18 Mil.
Selling, General & Admin. Expense(SGA) was $8.47 Mil.
Total Current Liabilities was $2.68 Mil.
Long-Term Debt was $1.80 Mil.
Net Income was 0.019 + 0.325 + 1.037 + 0.895 = $2.28 Mil.
Non Operating Income was 0.003 + -0.002 + -0.016 + -0.046 = $-0.06 Mil.
Cash Flow from Operations was 0.389 + 0.752 + 2.731 + 2.224 = $6.10 Mil.
|Accounts Receivable was $5.86 Mil.
Revenue was 13.49 + 13.801 + 14.559 + 14.36 = $56.21 Mil.
Gross Profit was 1.786 + 1.775 + 2.506 + 2.828 = $8.90 Mil.
Total Current Assets was $14.43 Mil.
Total Assets was $30.65 Mil.
Property, Plant and Equipment(Net PPE) was $15.49 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.09 Mil.
Selling, General & Admin. Expense(SGA) was $7.52 Mil.
Total Current Liabilities was $3.06 Mil.
Long-Term Debt was $1.80 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)|
|=||(5.969 / 60.705)||/||(5.863 / 56.21)|
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)|
|=||(2.641 / 56.21)||/||(2.43 / 60.705)|
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 - (17.794 + 14.338) / 33.118)||/||(1 - (14.431 + 15.488) / 30.65)|
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))|
|=||(3.085 / (3.085 + 15.488))||/||(3.178 / (3.178 + 14.338))|
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)|
|=||(8.474 / 60.705)||/||(7.518 / 56.21)|
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)|
|=||((1.8 + 2.677) / 33.118)||/||((1.8 + 3.057) / 30.65)|
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|
|=||(2.276 - -0.061||-||6.096)||/||33.118|
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.
MOD-PAC Corporation has a M-score of -2.97 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
MOD-PAC Corporation Annual Data
MOD-PAC Corporation Quarterly Data