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Beneish M-Score 7.83 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.
NovaBay Pharmaceuticals Inc has a M-score of 7.83 signals that the company is a manipulator.
During the past 11 years, the highest Beneish M-Score of NovaBay Pharmaceuticals Inc was 454.23. The lowest was -10000000.00. And the median was -3.19.
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 * 12.8807||+||0.528 * 1.1483||+||0.404 * 1.8728||+||0.892 * 0.305||+||0.115 * 0.8011|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 3.0184||+||4.679 * -0.0345||-||0.327 * 0.6865|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $0.44 Mil.|
Revenue was 0.123 + 0.288 + 0.51 + 1.099 = $2.02 Mil.
Gross Profit was 0.105 + 0.158 + 0.43 + 1.056 = $1.75 Mil.
Total Current Assets was $12.88 Mil.
Total Assets was $13.51 Mil.
Property, Plant and Equipment(Net PPE) was $0.49 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.29 Mil.
Selling, General & Admin. Expense(SGA) was $6.15 Mil.
Total Current Liabilities was $2.02 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -2.942 + -3.565 + -4.137 + -3.848 = $-14.49 Mil.
Non Operating Income was 0.854 + 0.513 + 0.72 + -0.863 = $1.22 Mil.
Cash Flow from Operations was -3.753 + -4.416 + -4.675 + -2.406 = $-15.25 Mil.
|Accounts Receivable was $0.11 Mil.
Revenue was 0.848 + 1.02 + 1.113 + 3.642 = $6.62 Mil.
Gross Profit was 0.832 + 0.998 + 1.113 + 3.642 = $6.59 Mil.
Total Current Assets was $11.99 Mil.
Total Assets was $12.83 Mil.
Property, Plant and Equipment(Net PPE) was $0.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.33 Mil.
Selling, General & Admin. Expense(SGA) was $6.68 Mil.
Total Current Liabilities was $2.79 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)|
|=||(0.44 / 2.02)||/||(0.112 / 6.623)|
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)|
|=||(0.158 / 6.623)||/||(0.105 / 2.02)|
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 - (12.879 + 0.488) / 13.513)||/||(1 - (11.992 + 0.761) / 12.827)|
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))|
|=||(0.328 / (0.328 + 0.761))||/||(0.294 / (0.294 + 0.488))|
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)|
|=||(6.145 / 2.02)||/||(6.675 / 6.623)|
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 + 2.017) / 13.513)||/||((0 + 2.789) / 12.827)|
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|
|=||(-14.492 - 1.224||-||-15.25)||/||13.513|
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 7.83 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