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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 -2.62 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of ORBCOMM, Inc. was 16.91. The lowest was -3.09. And the median was -2.50.
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 * 1.1448||+||0.528 * 1.0753||+||0.404 * 1.1375||+||0.892 * 1.1506||+||0.115 * 1.0778|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.039||+||4.679 * -0.0173||-||0.327 * 2.2863|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $14.10 Mil.|
Revenue was 19.24 + 19.693 + 18.559 + 16.72 = $74.21 Mil.
Gross Profit was 9.002 + 9.358 + 9.01 + 8.913 = $36.28 Mil.
Total Current Assets was $90.03 Mil.
Total Assets was $261.47 Mil.
Property, Plant and Equipment(Net PPE) was $133.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.00 Mil.
Selling, General & Admin. Expense(SGA) was $26.13 Mil.
Total Current Liabilities was $15.49 Mil.
Long-Term Debt was $46.57 Mil.
Net Income was 0.819 + 0.986 + 1.686 + 1.108 = $4.60 Mil.
Non Operating Income was -0.009 + 0.041 + 0.352 + -0.011 = $0.37 Mil.
Cash Flow from Operations was 3.303 + 3.296 + 2.507 + -0.352 = $8.75 Mil.
|Accounts Receivable was $10.70 Mil.
Revenue was 16.206 + 16.094 + 16.319 + 15.879 = $64.50 Mil.
Gross Profit was 8.385 + 8.651 + 8.801 + 8.07 = $33.91 Mil.
Total Current Assets was $78.85 Mil.
Total Assets was $206.77 Mil.
Property, Plant and Equipment(Net PPE) was $101.21 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.94 Mil.
Selling, General & Admin. Expense(SGA) was $21.85 Mil.
Total Current Liabilities was $16.56 Mil.
Long-Term Debt was $4.90 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)|
|=||(14.098 / 74.212)||/||(10.703 / 64.498)|
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)|
|=||(9.358 / 64.498)||/||(9.002 / 74.212)|
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 - (90.029 + 133.028) / 261.474)||/||(1 - (78.851 + 101.208) / 206.766)|
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))|
|=||(4.938 / (4.938 + 101.208))||/||(6.001 / (6.001 + 133.028))|
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)|
|=||(26.125 / 74.212)||/||(21.853 / 64.498)|
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)|
|=||((46.571 + 15.489) / 261.474)||/||((4.901 + 16.564) / 206.766)|
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|
|=||(4.599 - 0.373||-||8.754)||/||261.474|
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 -2.62 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
ORBCOMM, Inc. Annual Data
ORBCOMM, Inc. Quarterly Data