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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 13 years, the highest Beneish M-Score of ORBCOMM Inc was 17.30. The lowest was -3.66. And the median was -2.58.
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 * 1.0985||+||0.528 * 1.0982||+||0.404 * 1.6365||+||0.892 * 1.5515||+||0.115 * 0.6012|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9083||+||4.679 * -0.0212||-||0.327 * 1.7223|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $26.88 Mil.|
Revenue was 42.33 + 29.468 + 23.126 + 24.298 = $119.22 Mil.
Gross Profit was 20.678 + 11.873 + 12.311 + 13.121 = $57.98 Mil.
Total Current Assets was $132.31 Mil.
Total Assets was $529.66 Mil.
Property, Plant and Equipment(Net PPE) was $188.46 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.51 Mil.
Selling, General & Admin. Expense(SGA) was $35.62 Mil.
Total Current Liabilities was $39.62 Mil.
Long-Term Debt was $150.00 Mil.
Net Income was -2.873 + -5.623 + -0.033 + 1.403 = $-7.13 Mil.
Non Operating Income was 0.188 + -2.516 + 0.062 + 0.061 = $-2.21 Mil.
Cash Flow from Operations was 4.819 + -2.682 + 4.506 + -0.33 = $6.31 Mil.
|Accounts Receivable was $15.77 Mil.
Revenue was 19.35 + 19.24 + 19.693 + 18.559 = $76.84 Mil.
Gross Profit was 10.253 + 10.265 + 10.486 + 10.039 = $41.04 Mil.
Total Current Assets was $100.13 Mil.
Total Assets was $311.81 Mil.
Property, Plant and Equipment(Net PPE) was $136.54 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.54 Mil.
Selling, General & Admin. Expense(SGA) was $25.28 Mil.
Total Current Liabilities was $18.25 Mil.
Long-Term Debt was $46.57 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)|
|=||(26.876 / 119.222)||/||(15.769 / 76.842)|
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)|
|=||(11.873 / 76.842)||/||(20.678 / 119.222)|
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 - (132.312 + 188.461) / 529.656)||/||(1 - (100.127 + 136.544) / 311.813)|
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))|
|=||(6.542 / (6.542 + 136.544))||/||(15.512 / (15.512 + 188.461))|
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)|
|=||(35.624 / 119.222)||/||(25.28 / 76.842)|
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)|
|=||((150 + 39.624) / 529.656)||/||((46.571 + 18.245) / 311.813)|
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|
|=||(-7.126 - -2.205||-||6.313)||/||529.656|
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 -1.95 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
ORBCOMM Inc Annual Data
ORBCOMM Inc Quarterly Data