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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 -2.24.
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 * 1.0916||+||0.528 * 1.1408||+||0.404 * 1.7362||+||0.892 * 1.8923||+||0.115 * 0.4051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7161||+||4.679 * -0.0493||-||0.327 * 1.5688|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $34.5 Mil.|
Revenue was 46.084 + 44.883 + 42.33 + 29.468 = $162.8 Mil.
Gross Profit was 21.894 + 21.775 + 20.678 + 11.873 = $76.2 Mil.
Total Current Assets was $118.2 Mil.
Total Assets was $515.5 Mil.
Property, Plant and Equipment(Net PPE) was $195.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.8 Mil.
Selling, General & Admin. Expense(SGA) was $40.3 Mil.
Total Current Liabilities was $36.5 Mil.
Long-Term Debt was $151.3 Mil.
Net Income was 1.591 + -12.208 + -2.873 + -5.623 = $-19.1 Mil.
Non Operating Income was -0.085 + 0.204 + 0.188 + -2.516 = $-2.2 Mil.
Cash Flow from Operations was 3.85 + 2.516 + 4.819 + -2.682 = $8.5 Mil.
|Accounts Receivable was $16.7 Mil.
Revenue was 23.126 + 24.298 + 19.35 + 19.24 = $86.0 Mil.
Gross Profit was 12.311 + 13.121 + 10.253 + 10.265 = $46.0 Mil.
Total Current Assets was $73.6 Mil.
Total Assets was $326.5 Mil.
Property, Plant and Equipment(Net PPE) was $179.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.3 Mil.
Selling, General & Admin. Expense(SGA) was $29.7 Mil.
Total Current Liabilities was $29.4 Mil.
Long-Term Debt was $46.4 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)|
|=||(34.453 / 162.765)||/||(16.679 / 86.014)|
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)|
|=||(21.775 / 86.014)||/||(21.894 / 162.765)|
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 - (118.189 + 195.238) / 515.501)||/||(1 - (73.571 + 179.241) / 326.537)|
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))|
|=||(8.257 / (8.257 + 179.241))||/||(23.812 / (23.812 + 195.238))|
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)|
|=||(40.283 / 162.765)||/||(29.729 / 86.014)|
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)|
|=||((151.275 + 36.464) / 515.501)||/||((46.446 + 29.358) / 326.537)|
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|
|=||(-19.113 - -2.209||-||8.503)||/||515.501|
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 -1.66 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