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Beneish M-Score 0.17 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 12 years, the highest Beneish M-Score of NovaBay Pharmaceuticals Inc was 454.23. The lowest was -10000000.00. And the median was -2.75.
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 NovaBay Pharmaceuticals 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 * 1.3108||+||0.528 * 0.9199||+||0.404 * 1.2595||+||0.892 * 2.9209||+||0.115 * 0.9733|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.4406||+||4.679 * 0.062||-||0.327 * 0.3872|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2.08 Mil.|
Revenue was 3.438 + 2.663 + 1.719 + 1.635 = $9.46 Mil.
Gross Profit was 2.872 + 2.184 + 1.108 + 1.044 = $7.21 Mil.
Total Current Assets was $14.42 Mil.
Total Assets was $15.14 Mil.
Property, Plant and Equipment(Net PPE) was $0.28 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.14 Mil.
Selling, General & Admin. Expense(SGA) was $19.44 Mil.
Total Current Liabilities was $3.73 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -3.736 + -2.69 + -5.077 + -4.204 = $-15.71 Mil.
Non Operating Income was -1.723 + -0.483 + -0.453 + 1.944 = $-0.72 Mil.
Cash Flow from Operations was -3.849 + -2.66 + -4.932 + -4.489 = $-15.93 Mil.
|Accounts Receivable was $0.54 Mil.
Revenue was 1.2 + 1.008 + 0.538 + 0.491 = $3.24 Mil.
Gross Profit was 0.931 + 0.755 + 0.39 + 0.194 = $2.27 Mil.
Total Current Assets was $6.18 Mil.
Total Assets was $6.69 Mil.
Property, Plant and Equipment(Net PPE) was $0.36 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.17 Mil.
Selling, General & Admin. Expense(SGA) was $15.10 Mil.
Total Current Liabilities was $4.25 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)|
|=||(2.079 / 9.455)||/||(0.543 / 3.237)|
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)|
|=||(2.27 / 3.237)||/||(7.208 / 9.455)|
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 - (14.42 + 0.282) / 15.141)||/||(1 - (6.177 + 0.359) / 6.69)|
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))|
|=||(0.17 / (0.17 + 0.359))||/||(0.139 / (0.139 + 0.282))|
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)|
|=||(19.439 / 9.455)||/||(15.103 / 3.237)|
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 + 3.728) / 15.141)||/||((0 + 4.254) / 6.69)|
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|
|=||(-15.707 - -0.715||-||-15.93)||/||15.141|
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.
NovaBay Pharmaceuticals Inc has a M-score of 0.17 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
NovaBay Pharmaceuticals Inc Annual Data
NovaBay Pharmaceuticals Inc Quarterly Data