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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 * 0.96||+||0.528 * 0.9595||+||0.404 * 1.0058||+||0.892 * 1.3211||+||0.115 * 0.7457|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8834||+||4.679 * -0.059||-||0.327 * 1.0283|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $38.1 Mil.|
Revenue was 50.064 + 43.56 + 44.996 + 46.084 = $184.7 Mil.
Gross Profit was 23.513 + 22.922 + 23.424 + 21.894 = $91.8 Mil.
Total Current Assets was $82.1 Mil.
Total Assets was $524.3 Mil.
Property, Plant and Equipment(Net PPE) was $232.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.0 Mil.
Selling, General & Admin. Expense(SGA) was $44.7 Mil.
Total Current Liabilities was $48.4 Mil.
Long-Term Debt was $150.0 Mil.
Net Income was -4.169 + -2.096 + 0.239 + 1.591 = $-4.4 Mil.
Non Operating Income was 0.099 + -0.19 + 0.032 + -0.085 = $-0.1 Mil.
Cash Flow from Operations was 4.242 + 3.664 + 14.898 + 3.85 = $26.7 Mil.
|Accounts Receivable was $30.1 Mil.
Revenue was 44.883 + 42.33 + 29.468 + 23.126 = $139.8 Mil.
Gross Profit was 21.775 + 20.678 + 11.873 + 12.311 = $66.6 Mil.
Total Current Assets was $120.6 Mil.
Total Assets was $515.6 Mil.
Property, Plant and Equipment(Net PPE) was $189.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.0 Mil.
Selling, General & Admin. Expense(SGA) was $38.3 Mil.
Total Current Liabilities was $39.7 Mil.
Long-Term Debt was $150.0 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)|
|=||(38.128 / 184.704)||/||(30.061 / 139.807)|
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)|
|=||(66.637 / 139.807)||/||(91.753 / 184.704)|
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 - (82.093 + 232.167) / 524.258)||/||(1 - (120.557 + 189.683) / 515.571)|
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))|
|=||(19.962 / (19.962 + 189.683))||/||(33.986 / (33.986 + 232.167))|
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)|
|=||(44.741 / 184.704)||/||(38.335 / 139.807)|
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 + 48.359) / 524.258)||/||((150 + 39.701) / 515.571)|
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|
|=||(-4.435 - -0.144||-||26.654)||/||524.258|
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 -2.54 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