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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 -2.23.
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 * 0.7711||+||0.528 * 0.97||+||0.404 * 1.0106||+||0.892 * 1.5058||+||0.115 * 0.6912|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8335||+||4.679 * -0.071||-||0.327 * 1.0442|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $31.2 Mil.|
Revenue was 43.56 + 44.996 + 46.084 + 44.883 = $179.5 Mil.
Gross Profit was 22.922 + 23.424 + 21.894 + 21.775 = $90.0 Mil.
Total Current Assets was $81.4 Mil.
Total Assets was $526.3 Mil.
Property, Plant and Equipment(Net PPE) was $235.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.1 Mil.
Selling, General & Admin. Expense(SGA) was $44.7 Mil.
Total Current Liabilities was $46.8 Mil.
Long-Term Debt was $150.0 Mil.
Net Income was -2.096 + 0.239 + 1.591 + -12.208 = $-12.5 Mil.
Non Operating Income was -0.19 + 0.032 + -0.085 + 0.204 = $-0.0 Mil.
Cash Flow from Operations was 3.664 + 14.898 + 3.85 + 2.516 = $24.9 Mil.
|Accounts Receivable was $26.9 Mil.
Revenue was 42.33 + 29.468 + 23.126 + 24.298 = $119.2 Mil.
Gross Profit was 20.678 + 11.873 + 12.311 + 13.121 = $58.0 Mil.
Total Current Assets was $132.3 Mil.
Total Assets was $529.7 Mil.
Property, Plant and Equipment(Net PPE) was $188.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.5 Mil.
Selling, General & Admin. Expense(SGA) was $35.6 Mil.
Total Current Liabilities was $39.6 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)|
|=||(31.205 / 179.523)||/||(26.876 / 119.222)|
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)|
|=||(23.424 / 119.222)||/||(22.922 / 179.523)|
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 - (81.354 + 235.182) / 526.306)||/||(1 - (132.312 + 188.461) / 529.656)|
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))|
|=||(15.512 / (15.512 + 188.461))||/||(29.075 / (29.075 + 235.182))|
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)|
|=||(44.71 / 179.523)||/||(35.624 / 119.222)|
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 + 46.757) / 526.306)||/||((150 + 39.624) / 529.656)|
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|
|=||(-12.474 - -0.039||-||24.928)||/||526.306|
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 -2.60 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