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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 -2.82.
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 * 0.4724||+||0.528 * 0.7554||+||0.404 * 1.5443||+||0.892 * 4.1565||+||0.115 * 1.1838|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5485||+||4.679 * -0.4859||-||0.327 * 2.7907|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $0.54 Mil.|
Revenue was 1.635 + 1.2 + 1.008 + 0.538 = $4.38 Mil.
Gross Profit was 1.044 + 0.931 + 0.755 + 0.39 = $3.12 Mil.
Total Current Assets was $4.53 Mil.
Total Assets was $5.08 Mil.
Property, Plant and Equipment(Net PPE) was $0.40 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.16 Mil.
Selling, General & Admin. Expense(SGA) was $18.09 Mil.
Total Current Liabilities was $4.63 Mil.
Long-Term Debt was $1.66 Mil.
Net Income was -4.204 + -5.242 + -4.887 + -4.64 = $-18.97 Mil.
Non Operating Income was 1.944 + 0.108 + -0.022 + 0.023 = $2.05 Mil.
Cash Flow from Operations was -4.489 + -4.138 + -5.425 + -4.507 = $-18.56 Mil.
|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.
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)|
|=||(0.536 / 4.381)||/||(0.273 / 1.054)|
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)|
|=||(0.931 / 1.054)||/||(1.044 / 4.381)|
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 - (4.527 + 0.395) / 5.077)||/||(1 - (6.952 + 0.436) / 7.537)|
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))|
|=||(0.232 / (0.232 + 0.436))||/||(0.164 / (0.164 + 0.395))|
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)|
|=||(18.089 / 4.381)||/||(7.934 / 1.054)|
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)|
|=||((1.655 + 4.633) / 5.077)||/||((0 + 3.345) / 7.537)|
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|
|=||(-18.973 - 2.053||-||-18.559)||/||5.077|
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 -2.82 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