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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.
ORBCOMM Inc has a M-score of -2.02 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of ORBCOMM Inc was 4.48. The lowest was -7020.55. And the median was -2.66.
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 * 1.0616||+||0.528 * 1.1278||+||0.404 * 1.6251||+||0.892 * 1.2084||+||0.115 * 0.9369|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0711||+||4.679 * -0.0231||-||0.327 * 0.9305|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $16.68 Mil.|
Revenue was 23.126 + 24.298 + 19.35 + 19.24 = $86.01 Mil.
Gross Profit was 12.311 + 13.121 + 10.253 + 5.878 = $41.56 Mil.
Total Current Assets was $73.57 Mil.
Total Assets was $326.54 Mil.
Property, Plant and Equipment(Net PPE) was $179.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.26 Mil.
Selling, General & Admin. Expense(SGA) was $31.30 Mil.
Total Current Liabilities was $29.36 Mil.
Long-Term Debt was $46.45 Mil.
Net Income was -0.033 + 1.403 + -0.431 + 0.819 = $1.76 Mil.
Non Operating Income was 0.062 + 0.061 + -0.016 + -0.009 = $0.10 Mil.
Cash Flow from Operations was 4.506 + 0.739 + 0.639 + 3.303 = $9.19 Mil.
|Accounts Receivable was $13.00 Mil.
Revenue was 19.693 + 18.559 + 16.72 + 16.206 = $71.18 Mil.
Gross Profit was 10.486 + 10.039 + 9.88 + 8.385 = $38.79 Mil.
Total Current Assets was $96.70 Mil.
Total Assets was $262.30 Mil.
Property, Plant and Equipment(Net PPE) was $129.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.56 Mil.
Selling, General & Admin. Expense(SGA) was $24.19 Mil.
Total Current Liabilities was $20.44 Mil.
Long-Term Debt was $45.00 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)|
|=||(16.679 / 86.014)||/||(13.001 / 71.178)|
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)|
|=||(13.121 / 71.178)||/||(12.311 / 86.014)|
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 - (73.571 + 179.241) / 326.537)||/||(1 - (96.7 + 129.156) / 262.297)|
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))|
|=||(5.558 / (5.558 + 129.156))||/||(8.257 / (8.257 + 179.241))|
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)|
|=||(31.303 / 86.014)||/||(24.185 / 71.178)|
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)|
|=||((46.446 + 29.358) / 326.537)||/||((45 + 20.438) / 262.297)|
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|
|=||(1.758 - 0.098||-||9.187)||/||326.537|
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.
ORBCOMM Inc has a M-score of -2.02 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