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GuruFocus has detected 3 Warning Signs with ORBCOMM Inc $ORBC.
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ORBCOMM Inc (NAS:ORBC)
Beneish M-Score
-2.98 (As of Today)

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.

ORBCOMM Inc has a M-score of -2.98 suggests that the company is not a manipulator.

ORBC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: 17.3
Current: -2.98

-3.09
17.3

During the past 13 years, the highest Beneish M-Score of ORBCOMM Inc was 17.30. The lowest was -3.09. And the median was -2.20.


Definition

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 ORBCOMM 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 * 1.0227+0.528 * 0.9801+0.404 * 1.0002+0.892 * 1.0474+0.115 * 0.6259
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0089+4.679 * -0.1046-0.327 * 1.0636
=-2.98

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $31.9 Mil.
Revenue was 46.832 + 46.288 + 50.064 + 43.56 = $186.7 Mil.
Gross Profit was 24.08 + 23.279 + 23.513 + 22.922 = $93.8 Mil.
Total Current Assets was $88.2 Mil.
Total Assets was $506.2 Mil.
Property, Plant and Equipment(Net PPE) was $215.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.8 Mil.
Selling, General & Admin. Expense(SGA) was $46.9 Mil.
Total Current Liabilities was $50.3 Mil.
Long-Term Debt was $147.5 Mil.
Net Income was -3.205 + -14.041 + -4.169 + -2.096 = $-23.5 Mil.
Non Operating Income was 0.149 + 0.426 + 0.099 + -0.19 = $0.5 Mil.
Cash Flow from Operations was 9.739 + 11.281 + 4.242 + 3.664 = $28.9 Mil.
Accounts Receivable was $29.8 Mil.
Revenue was 44.996 + 46.084 + 44.883 + 42.33 = $178.3 Mil.
Gross Profit was 23.424 + 21.894 + 21.775 + 20.678 = $87.8 Mil.
Total Current Assets was $84.3 Mil.
Total Assets was $523.0 Mil.
Property, Plant and Equipment(Net PPE) was $230.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.6 Mil.
Selling, General & Admin. Expense(SGA) was $44.4 Mil.
Total Current Liabilities was $45.6 Mil.
Long-Term Debt was $146.5 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(31.937 / 186.744) / (29.816 / 178.293)
=0.17102022 / 0.16723035
=1.0227

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(87.771 / 178.293) / (93.794 / 186.744)
=0.49228517 / 0.50225978
=0.9801

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (88.208 + 215.841) / 506.154) / (1 - (84.251 + 229.97) / 523.019)
=0.39929547 / 0.39921685
=1.0002

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=186.744 / 178.293
=1.0474

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))
=(26.571 / (26.571 + 229.97)) / (42.803 / (42.803 + 215.841))
=0.10357409 / 0.16549002
=0.6259

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)
=(46.915 / 186.744) / (44.395 / 178.293)
=0.25122628 / 0.24900024
=1.0089

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)
=((147.458 + 50.326) / 506.154) / ((146.548 + 45.605) / 523.019)
=0.39075854 / 0.36739201
=1.0636

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-23.511 - 0.484 - 28.926) / 506.154
=-0.1046

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.

ORBCOMM Inc has a M-score of -2.98 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

ORBCOMM Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88760.66571.03770.95391.38750.9671.14481.26860.69391.0227
GMI 0.42290.637837.30440.02461.18940.88381.06411.1091.00380.9801
AQI 0.76821.55020.86780.82772.50291.1561.13750.98582.75621.0002
SGI 1.14810.97011.00941.33051.26261.39291.15061.29691.85251.0474
DEPI 1.62561.40070.15983.6450.96391.26671.07780.76130.54740.6259
SGAI 0.97931.10031.42090.46430.94870.74311.0290.97330.77331.0089
LVGI 1.38811.02040.710.89081.66680.912.28631.51891.01911.0636
TATA -0.0406-0.0399-0.0371-0.0501-0.0311-0.0308-0.0173-0.0108-0.0759-0.1046
M-score -3.09-2.9516.43-2.61-1.54-2.20-2.62-2.16-1.66-2.98

ORBCOMM Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.06161.26861.09850.94861.09160.69390.77110.960.88131.0227
GMI 1.11761.1091.09821.1211.14081.00380.970.95950.92970.9801
AQI 1.62510.98581.63651.72061.73622.75621.01061.00581.03991.0002
SGI 1.20841.29691.55151.6931.89231.85251.50581.32111.1361.0474
DEPI 0.95530.76130.60120.44180.40510.54740.69120.74570.72070.6259
SGAI 1.06640.97330.90830.83180.71610.77330.83350.88341.00741.0089
LVGI 0.93051.51891.72231.67941.56881.01911.04421.02831.05761.0636
TATA -0.0231-0.0108-0.0212-0.0498-0.0493-0.0759-0.071-0.059-0.1073-0.1046
M-score -2.02-2.16-1.95-2.04-1.66-1.66-2.60-2.54-3.04-2.98
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