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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 12 years, the highest Beneish M-Score of NovaBay Pharmaceuticals Inc was 454.23. The lowest was -5.22. And the median was -3.20.
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 * 1.1487||+||0.528 * 1.7728||+||0.404 * 2.1942||+||0.892 * 0.3031||+||0.115 * 0.8761|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 4.0966||+||4.679 * -0.2421||-||0.327 * 1.915|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $0.27 Mil.|
Revenue was 0.491 + 0.152 + 0.123 + 0.288 = $1.05 Mil.
Gross Profit was 0.194 + 0.11 + 0.105 + 0.158 = $0.57 Mil.
Total Current Assets was $6.95 Mil.
Total Assets was $7.54 Mil.
Property, Plant and Equipment(Net PPE) was $0.44 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.23 Mil.
Selling, General & Admin. Expense(SGA) was $7.93 Mil.
Total Current Liabilities was $3.35 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -4.468 + -4.219 + -2.942 + -3.565 = $-15.19 Mil.
Non Operating Income was 0.425 + -0.106 + 0.854 + 0.513 = $1.69 Mil.
Cash Flow from Operations was -4.14 + -2.746 + -3.753 + -4.416 = $-15.06 Mil.
|Accounts Receivable was $0.78 Mil.
Revenue was 0.51 + 1.099 + 0.848 + 1.02 = $3.48 Mil.
Gross Profit was 0.43 + 1.056 + 0.832 + 0.998 = $3.32 Mil.
Total Current Assets was $14.79 Mil.
Total Assets was $15.65 Mil.
Property, Plant and Equipment(Net PPE) was $0.72 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.31 Mil.
Selling, General & Admin. Expense(SGA) was $6.39 Mil.
Total Current Liabilities was $3.63 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)|
|=||(0.273 / 1.054)||/||(0.784 / 3.477)|
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)|
|=||(0.11 / 3.477)||/||(0.194 / 1.054)|
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 - (6.952 + 0.436) / 7.537)||/||(1 - (14.791 + 0.718) / 15.65)|
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))|
|=||(0.314 / (0.314 + 0.718))||/||(0.232 / (0.232 + 0.436))|
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)|
|=||(7.934 / 1.054)||/||(6.389 / 3.477)|
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 + 3.345) / 7.537)||/||((0 + 3.627) / 15.65)|
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|
|=||(-15.194 - 1.686||-||-15.055)||/||7.537|
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 -4.05 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
NovaBay Pharmaceuticals Inc Annual Data
NovaBay Pharmaceuticals Inc Quarterly Data